Regulatory & Tax Policy Watch: Key Changes Reshaping Market Incentives

In a dynamic global economy, regulatory and fiscal policies are crucial in shaping market opportunities and risks. Recent announcements leading up to September 29, 2025, indicate significant adjustments in tax policies, corporate regulations, and energy subsidies that could notably impact investor strategies and compliance requirements.

1. United States: Corporate Tax Adjustments Under the Biden Administration

The U.S. corporate tax landscape is undergoing substantial changes as the Biden administration pushes forward with its "Made in America" agenda. Effective from January 1, 2026, the corporate tax rate will see an increase from 21% to 28%. This change aims to fund major infrastructure projects and clean energy initiatives. The administration estimates that this will generate an additional $400 billion over the next decade, encouraging domestic production and reducing dependency on foreign supply chains.

Market Impact: Companies with substantial revenues and fewer deductions will face increased tax burdens, potentially leading to reduced cash flows and affecting share buybacks and dividends. Tax-sensitive investors may reassess their portfolios with a focus on firms that possess strategic tax management capabilities.

Compliance Checklist for Firms: 1) Review and adjust tax strategy; 2) Engage in proactive tax planning; 3) Conduct assessments on the impact of new legislation on financial reporting.

2. European Union: Green Energy Subsidies and the Fit for 55 Package

The European Union continues to shape its market dynamics with the "Fit for 55" climate package initiated in July 2021, designed to reduce greenhouse gas emissions by at least 55% by 2030. As of September 2025, new green subsidies have been introduced for both industries and consumers transitioning to sustainable energy sources. These subsidies aim to lower initial investment barriers but are dependent on a firm commitment to stricter emissions regulations.

The total budget allocated for direct investments in renewable projects has risen to €500 billion, illustrating the EU's commitment to reshaping its economic fabric.

Market Impact: Industries such as automotive, shipping, and energy production are likely to experience increased capex due to the need for compliance with emissions regulations. The financial incentives are expected to accelerate shifts towards green technologies, benefiting companies aligned with EU sustainability goals.

Compliance Checklist for Firms: 1) Monitor subsidy applications; 2) Implement compliance training for new energy regulations; 3) Invest in R&D for sustainable technologies.

3. China: Capital Controls and Financial Market Access Reforms

In response to fluctuating capital outflows and economic pressures, China has implemented partial rollbacks of its strict capital controls as of mid-2025. The State Administration of Foreign Exchange (SAFE) announced new measures to facilitate the flow of foreign investments into domestic markets. These measures, including adjustments to QFII (Qualified Foreign Institutional Investor) quotas and reduced restrictions on foreign currency exchanges, aim to attract foreign capital amidst global uncertainty.

Market Impact: The Chinese markets are anticipated to open further, inviting foreign institutional investments. This adjustment could lead to increased market liquidity but poses risks related to asset valuation volatility, especially for sensitive sectors like tech and real estate.

Compliance Checklist for Firms: 1) Monitor changes in foreign investment regulations; 2) Analyze risk exposure stemming from increased foreign capital; 3) Update risk management strategies.

Investor/Policy Takeaways

1. Investors should adjust their portfolios to factor in increased corporate tax rates in the U.S., focusing on companies with strong tax strategies.
2. European firms in traditional sectors need to prepare rapidly for compliance with stringent climate goals and the associated financial implications.
3. Chinese regulatory environments are becoming more favorable for foreign investments, but firms must remain vigilant regarding asset valuations and market dynamics.