- Google reaches £130 million tax settlement deal with the UK – 22 January
- 31 countries sign tax co-operation agreement to enable automatic sharing of country by country information – 27 January
- European Commission publishes Anti-tax avoidance package (ATAP) – 28 January
- European Commission publishes Roadmap for the expected VAT Action Plan – 28 January
- MEPs discuss anti-tax avoidance package with Commissioner Moscovici – 2 February
- Council to discuss Commission proposals to tackle tax avoidance – 9/12 February
Fiscal Sustainability Report 2015 – 26 January
The European Commission has published its Fiscal Sustainability Report 2015. The report provides an overview of the main fiscal sustainability challenges faced by Member States. The report in particular concludes that whilst public finances in the EU have improved since the beginning of the crisis, significant medium to long term challenges remain notably due to increasing levels of debt as well as ageing populations.
Consultation on proposal to reform notifications of new regulatory requirements for services providers – 26 January
The European Commission has launched a public consultation on a possible proposal to reform the procedure whereby Member States notify new regulatory requirements applicable to service providers. The consultation in particular seeks the views of stakeholders on the existing services notification procedure established by the Services Directive and on potential improvements for the procedure. The consultation has no direct relevance for the profession or tax advisers, but does demonstrate the Commission’s growing efforts to reform the existing framework for service provision across the Single Market. The deadline for providing replies is 19 April.
Action lines for liberal profession – 26 January
A European Commission’s Working Group on Liberal Professions has published its report with recommendations for the liberal professions’ EU framework. The Working Group consists of representatives of national and European associations of Liberal Professions from EU Member States. The views and recommendations of the report do not (necessarily) reflect the views of the Commission. Of particular interest, the recommendations cover tax advisers and notably call for formalising the representation of the liberal professions in the working of DG GROW (Internal Market, Industry, Entrepreneurship and SMEs).
European Commission publishes anticipated anti-BEPS package – 28 January
The European Commission has published a set of proposals and recommendations aiming to bring greater coherence and common standards and approaches to addressing tax base erosion and related corporate tax challenges at EU-level. The package is referred to as the Anti-Tax Avoidance Package (ATAP), and consists of:
- Two Directives (including one amending Directive);
- Two communications (policy documents with no legal effect outlining Commission’s thinking on a particular issue);
- And document with recommendations (non-binding legal instrument that encourages those to whom it is addressed to act in a particular way) for Member States with regard to their bilateral tax agreements.
The general purpose of the measures is to foster the implementation of the OECD BEPS recommendations in the EU in a coordinated manner, and establish a set of minimum criteria that Member States will have to respect whilst transposing the recommendations into national legislation. Member States may choose to go beyond what the Commission proposals stipulate. The main components of interest are of course the Anti-Tax Avoidance Directive (ATAD) as well as the amending Directive on mandatory automatic exchange of information (AEOI) in the field of taxation. The former addresses a number of OECD BEPS related questions, whilst the latter concentrates specifically on introducing the OECD BEPS Country-by-Country Reporting (CBCR) provisions into the existing AEOI legislative framework. The CBCR provisions are subject to disclosure to tax authorities only, and the information requirements are in line with OECD BEPS provisions. Of additional particular interest is the Communication on an External Strategy for Effective Taxation in which the Commission notably sets out an action plan towards establishing common criteria for the identification, sanctions and a list of countries labelled as non-cooperative jurisdictions.
In terms of some of the ATAD’s particular features:
- The provisions on interest deduction stipulate that exceeding borrowing costs shall be deductible in the tax year in which they are incurred only up to 30% of the taxpayer’s earnings before interest, tax, depreciation and amortisation (EBITDA) or up to an amount of €1 million, “whichever is higher”;
- The switch-over clause provisions stipulate that companies will have to report to competent tax authorities when they receive a dividend from a third country and whether or not they have paid taxes on it in the country from which the dividend originates. If the received dividend has been subject to a tax on profits at a statutory corporate tax rate lower than 40% of the statutory tax rate that would have been charged under the applicable corporate tax system in the Member State of the taxpayer, the dividend will be subject to a tax on foreign income in the Member State in question, with a deduction on possible taxes already paid in the third country (to remove double-taxation concerns);
- And on exit taxation, the provisions require Member States to apply an exit tax on assets or tax residence moved from their territory to a third country or, interestingly, to another Member State (which may not be unproblematic from a free movement of capital perspective).
In terms of next steps, the Dutch Presidency is aiming for concluding the ATAD before the end of its mandate in June. Member States have already committed to a number of the proposed measures through their participation and commitments made in the OECD BEPS project. Having said that, due to the sensitive nature of the proposals and taxation remaining subject to national sovereignty (and unanimity in the Council), the negotiations may take longer than anticipated. Tough Council discussions are anticipated at least with regard to hybrid mismatches (Commission took a different approach from that of the Council), CFC rules (40% threshold likely seen as too low) as well as the switch-over clause.
“EU could investigate Google’s ‘sweetheart’ tax deal with UK” – 28 January
According to the Guardian, Commissioner Margrethe Vestager has stated that the Commission will be looking into the legality of the £130 million tax settlement deal between the UK and Google (see the International-section for additional details on the deal) if a complaint on it is submitted. There is a possibility that the deal could be interpreted as a breach of EU’s state aid rules. The Scottish National Party has already submitted a letter criticising the arrangement to Commissioner Vestager.
Commission publishes Roadmap for the Action Plan for a simple, efficient and fraud-proof definitive system of Value Added Tax tailored to the single market – 28 January
The European Commission has published its Roadmap on the anticipated VAT Action Plan (AP). It outlines additional details and provisions to be included in the AP, expected for 8 March. Of particular interest, the AP will present the main principles and features for an efficient and fraud-proof definitive VAT regime and initiatives on VAT rates and e-commerce in the context of the Digital Single Market. The AP will moreover come in the form of a communication outlining the Commission’s strategic planning and thinking for reforming the EU VAT system, and will in particular set out the direction for future work. Finally, the Roadmap outlines four options that the Commission is considering for intra-EU B2B supplies of goods, and public consultations on specific provisions may eventually follow. In terms of background, roadmaps for new major initiatives describe the problem to be tackled and the objectives to be achieved, explain why EU action is needed and its added value and outline alternative policy options.
“Juncker backs forcing multinational companies to publish their tax bills” – 29 January
According to Euractiv, the President of the European Commission Jean-Claude Juncker has expressed his support for public Country-by-Country Reporting (CBCR), however on the condition that the ongoing Commission impact assessment on it will not demonstrate harm to European businesses or competitiveness. The public CBCR requirement would apply to both EU and non-EU companies. Furthermore, according to the article any provisions on public disclosure would either be inserted into the Shareholder’s Rights Directive, or the Accounting Directive. The Commission will announce its intentions in this regard during the spring, probably early-March but by May at the very latest.
European Commission launches Action Plan against terrorist financing, potential tax implications – 2 February
The European Commission has launched an Action Plan on terrorist financing with some potential implications on the tax side of things. Of particular interest, the Commission will propose to establish centralised bank and payment account registers with the aim of providing relevant authorities with information on bank and payment accounts. The Commission will in parallel “explore the possibility” of a distinct legal instrument to broaden the access to such centralised bank and payment account registers. Such an instrument would enable the consultation of these registers for other investigations as well, including on asset recovery and tax fraud and extending access to other relevant authorities such as tax administrations.
Motion for a European Parliament resolution on measures to combat tax evasion – 19 January
The Right-wing MEPs Sophie Montel (ENF/FRA) and Florian Philippot (ENF/FRA) have published a Motion for resolution on combatting tax evasion. Of particular interest, the Motion calls on the Commission to restore “fiscal frontiers” by ending transfer pricing and enabling Member States to tax profits made by multinationals abroad. The proposal has no legislative weight on the Commission or the Council.
ECON Committee public hearing with Cypriot Finance Minister, MEPs criticise the country’s tax practices – 26 January
The European Parliament ECON Committee has held a public hearing with the Cypriot Finance Minister Harris Georgiades. The hearing focused in particular on the economic adjustment programme and recovery of the country. However, taxation also came up during the discussions, with MEPs criticising the country’s relatively low corporate tax rates as well as the country’s generous tax regime on intellectual property. The Minister defended these practices by stating that Cyprus complies with relevant EU legislation and expressed his preference for lower taxes on businesses.
MEPs slam Google’s tax deal – 28 January
According to Politico, a number of TAXE 2 Committee MEPs have criticised the £130 million tax settlement deal reached between the UK and Google (see the International-section for additional details on the deal). The group of MEPs includes the influential Committee chairperson, Mr. Alain Lamassoure (EPP/FRA). In particular, the MEPs are calling for Google to attend the Committee’s hearing to explain further details of the deal, and on the Commission to launch a state aid investigation into the arrangement, which the Commission is indeed considering.
Additional TAXE Committee studies used as a background for the Committee report – 2 February
The European Parliament has published a number of studies that formed the basis for the special TAXE Committee’s report which was adopted by the Parliament in November last year. The studies and their findings are likely to shape the work and conclusions of the subsequent TAXE 2 Committee as well. The package consists of a total of six studies.
The first one titled Overview of Existing EU and National Legislation on Topics Covered by TAXE Mandate’ analyses current advance tax rulings, advance pricing agreements and other tax arrangements, and provides an overview of the features of tax rulings in general and of the tax ruling practices in EU Member States specifically. The second study titled EU State Aid Law and National Tax Rulings assesses the extent to which tax rulings can be subject to state aid investigations in the EU. The third study titled Nominal vs. Effective Corporate Tax Rates Applied by Multinational Enterprises provides a description of “significant aggressive tax planning techniques and mechanisms” used by multinationals, and assesses the extent of such practices. The study however concludes that there is “considerable uncertainty” on the actual scale of these practices. The fourth study titled Intellectual Property Box Regimes provides insights into currently existing Intellectual Property (IP) Box regimes in Europe, evaluates these regimes on the basis of EU state aid provisions and the Council’s Code of Conduct Group on business taxation, and assesses reform options to ensure that IP systems are not used for BEPS. The fifth study titled Overview of Legislation Practices Regarding Exchange of Information Between National Tax Administrations in Tax Matters provides an overview of recent developments in the area of information exchange on tax in the EU as well as at OECD-level, and pays particular attention to the legal protection of taxpayers’ data. The paper concludes that an international tax secret should constitute an EU minimum standard. Finally, the sixth study titled Selected International Third-Country Tax-Governance Issues focuses on the external dimension, and examines challenges faced by EU Member States as they move towards an increasingly transparent tax environment and continue to push for better tax good governance in third countries.
Source (includes links to all six studies):
MEPs discuss the anti-tax avoidance package with Commissioner Moscovici – 2 February
MEPs have held a public hearing in the presence of Commissioner Moscovici to discuss the recently published Commission proposals to tackle tax avoidance in the EU. During the discussion, Commissioner Moscovici confirmed the well-known fact that the Commission will look into public Country-by-Country Reporting (CBCR) separately during the spring, but insisted that public disclosure is conditional to the ongoing impact assessment not demonstrating harmful effects on Europe’s competitiveness, and that a “step-by-step approach” could be preferable. He however re-iterated his personal support for public disclosure. He moreover emphasised the importance of the anticipated Common Consolidated Corporate Tax Base (CCCTB) proposals for taking further steps in the fight against tax avoidance. A two-staged Commission proposal is expected for November.
On the MEPs’ side, a number of representatives continued to call for public CBCR, expressed broad support towards the Commission proposals, voiced support for a full and mandatory CCCTB, and raised concerns over the Council watering down the proposals. Members mainly from the conservative ECR group questioned EU’s legitimacy in tackling taxation which is formally a Member State competence. Moreover, several representatives argued on the proposed External Strategy that the EU should focus on its internal “tax havens” as well, giving the examples of Luxembourg and the Netherlands. Overall, more critical voices towards the proposals were heard from the Left (GUE-NGL, Greens-EFA) who felt that the Commission did not go quite far enough with the proposals, whilst on the conservative Right (ECR and some from EFDD) many members felt that the Commission has no business in legislating on national tax policies. Finally, voices from the centre-Left S&D group and the Greens-EFA called for minimum effective tax rates. With regard to tax advisory industry, the MEP Paul Tang (S&D/GER) called the Commission proposals a “historic opportunity” to put an end to the sector’s practices, and called for public CBCR for the same reason. Finally, members from the liberal ALDE group were mainly supportive but called for an adequate balance between tackling tax avoidance and ensuring the competitiveness of the EU’s economy. More specifically, the MEP Cora Van Nieuwenhuizen (ALDE/NLD) for example regretted the lack of a proper impact assessment on the Commission proposals, and suggested the possibility of the European Parliament carrying out such an assessment itself.
The European Parliament will not have a say in the Commission proposals on tax, which are subject to unanimity between Member States. However, in accordance with EU case law its opinion is required for the legislation to pass, thereby giving it delaying powers and by extension some leverage for negotiations.
European Parliament report on extending the current minimum VAT rate system – 4 February
The ECON Committee MEP Peter Simon (S&D/GER) has published his draft report on the Commission proposal for extending the current minimum VAT rate of 15% until 31 December 2017, from the initial end date of 1 January 2016. Mr. Simon approves the Commission proposal without proposing amendments, and asks for the Council to do the same. In terms of next steps, the European Parliament plenary will consider the report on 8 Mach.
European Parliament adopts a report on EU islands, approves special tax arrangements – 4 February
The European Parliament has adopted a resolution on EU islands, which attempts to draw the Commission’s attention to the specific challenges faced by islands located on remote areas, and calling for taking action in order to harness their full potential. Of particular interest, an amendment passed which recognises the importance of “special tax arrangements” granted to some islands in order to counter-balance their “natural and demographic permanent handicaps”, and consequently calls for the continuation of such arrangements especially in Member States subject to economic adjustment programmes.
MEP Questions & Answers
Aegean Islands’ economy undermined by VAT hikes – 22 December
The European Commission has replied to a question asked by the MEP Sofia Sakorafa (GUE-NGL/GRE) with regard to VAT increases in the Aegean Islands. In her question, Ms. Sakorafa expresses concerns over the negative impacts of the recent VAT increases in the Aegean Islands on their local economies. She argues that the VAT hikes are against EU VAT provisions, and asks the Commission whether EU funding will be made available in order to promote “additional structural growth measures” in the Aegean Islands in order to protect them from negative effects. In his reply, Commissioner Moscovici argues that phasing out the special VAT regimes will foster fairness in the Greek tax system, but the European Social Fund will provide supporting resources to boost local economies.
Digital single market tax regime – 22 December
The European Commission has replied to a question asked by the MEP Maria Grapini (S&D/ITA) with regard to the tax provisions in the context of the Digital Single Market (DSM). In her question, Ms. Grapini calls on the Commission to put forward legislative proposals to modernise the VAT regime applicable to cross-border e-commerce in goods and services, as well as reducing companies’ administrative burden caused by a variety of applicable VAT regimes. In his reply, Commissioner Moscovici confirms that the Commission will make a legislative proposal in 2016 aiming to reduce administrative burden on businesses originating from different VAT regimes. The proposal will include extending the current single electronic registration and payment mechanism to intra-EU and third country online sales of tangible goods to final consumers; introducing a common EU-wide simplification measure (VAT threshold) to help SMEs; enabling for home country controls including a single audit of cross-border businesses for VAT purposes; as well as removing the VAT exemption for the importation of small consignments from suppliers in third countries.
OECD report on taxing wages – 22 December
The European Commission has replied to a question asked by the MEP Dimitrios Papadimoulis (GUE-NGL/GRE) with regard to an OECD report on taxing wages. Mr. Papadimoulis refers to the results of a recent OECD report on labour taxes, and asks the Commission whether it is planning measures to enable Greece to reduce its tax burden on labour, and what reforms it would recommend to the Greek government in order to ensure that the tax burden is “fairly distributed”. In his reply, Commissioner Moscovici maintains that taxation is a Member State competence, but the possibilities for reducing taxes on labour will emerge once action to fight tax evasion and undeclared work starts to produce “tangible results”.
Increased VAT rates for nursing homes – 22 December
The European Commission has replied to a question asked by the MEP Theodoros Zagorakis (EPP/GRE) with regard to VAT on nursing homes. In his question, Mr. Zagorakis asks the Commission whether there could be alternatives to raising VAT on nursing homes, and asks what VAT rates apply on elderly care units elsewhere in the EU, and whether the Commission will seek to harmonise VAT on nursing homes across the Union. In his reply, Commissioner Moscovici refrains from providing estimated amounts of additional income from a VAT hike on nursing homes, points out that information on VAT rates applied in Member States is accessible publicly online although no data on elderly care units specifically is available, and confirms that the Commission is currently reviewing VAT exemptions in the public interest.
Eurozone governance – 6 January
The European Commission has replied to a question asked by the MEP Nadine Morano (EPP/FRA) with regard to the Eurozone governance. In her question, Ms. Morano asked the Commission whether it is planning to put forward proposals to improve the political governance of the Eurozone, and what measures it will undertake to foster a “genuine fiscal and social convergence” in Europe. In his reply, Commission Vice-President Valdis Dombrovskis refers to the ongoing efforts in the areas of the Banking Union as well as the Capital Markets Union, both of which will attempt to bring about greater convergence of economic rules and governance. Moreover, he confirms that the Commission will launch in 2016 a “broad consultation proves” as part of preparations of the longer-term and “more far-reaching measures” foreseen by the Five Presidents’ Report on completing the Economic and Monetary Union.
Tax balancing measures – 6 January
The European Commission has replied to a question asked by the MEP Andrea Cozzolino (S&D/ITA) with regard to tax balancing measures. In his question, Mr. Cozzolino notes the co-existence of the Eurozone with countries who have maintained “monetary sovereignty” and with a lack of tax regime harmonisation have given rise to “structural asymmetries” between EU regions. He proposes tax balancing measures (as opposed to tax harmonisation) to reduce these disparities, and asks the Commission to elaborate on whether measures such as the creation of “special economic zones” would help in addressing the structural disparities, whether it will address and consider tax balancing measures overall, and how the Commission plans to foster the introduction of tax balancing in less-developed regions of the EU in a way that is in accordance with EU state aid provisions. In his reply, Commissioner Moscovici brings up the planned re-launch of the Common Consolidated Corporate Tax Base (CCCTB) proposal in two stages, as well as the recently launched Anti-Tax Avoidance Package (ATAP), both of which he maintains will help address some of the challenges brought up by the MEP. Moreover, he points out that EU Treaties enable Member States to grant regional state aid to less developed geographical regions, including regional investment aid in the form of tax allowances or tax credit for example.
Aggressive tax planning and developing countries – 7 January
The European Commission has replied to a question asked by the MEP Louis Aliot (ENF/FRA) with regard to aggressive tax planning and developing countries. In his question, Mr. Aliot takes note of the harmful effects of “aggressive tax planning” on developing countries in particular, and asks the Commission whether it will make development aid conditional to adherence to new principles tackling against tax planning by multinationals. In his reply, Commissioner Neven Mimica (development) lists a number of initiatives and frameworks through which the Commission has already addressed some of the issues raised by the MEP. Moreover, he confirms that the Commission will address the issue of domestic revenue mobilisation which will entail addressing the international dimension of taxation for example through the G20/OECD BEPS project, automatic exchange of information (AEOI) and transfer pricing and supporting regional bodies and national administrations.
Remuneration of accountancy firms in relation to tax rulings and other tax issues – 7 January
The European Commission has replied to a question asked by the MEP Fabio De Masi (GUE-NGL/GER) with regard to accountancy firms and tax issues and tax rulings in particular. In his question, Mr. De Masi asks the Commission whether it is aware of cases in the EU where accountancy firms’ remuneration has been based “at least partially” on the amount of tax saved by a company to whom they provide advice. In his reply, Commissioner Moscovici states that the Commission has no such information available. He moreover points out that the remuneration of tax advisors is in principle not within the scope of tax rulings issued by tax administrations.
Increase in VAT in Greece – 12 January
The European Commission has replied to a question asked by the MEP Kostas Chrysogonos (GUE-NGL/GRE) with regard to VAT increases in Greece. In his question, Mr. Chrysogonos asks the Commission what “unacknowledged objectives” it is pursuing by insisting on VAT increases in the Greek economy that might prove counterproductive from a fiscal and economic perspective. In his reply, Commissioner Moscovici emphasises that Commission’s measures for Greece have had particular focus on improving the administration and tackling VAT fraud, and that an overall VAT system with less reduced rates is easier to administer and to comply with, which should have longer term benefits for the Greek economy.
“Belgium gets cold feet on financial transaction tax” – 26 January
According to Politico, Belgium has expressed reservations with regard to the Financial Transactions Tax (FTT). In particular, disagreements on the FTT have emerged from within Belgium’s ruling government coalition, with notably the Minister of Finance Johan Van Overtveldt stating that he will investigate how to “put a stop” to the tax. The Belgian government’s official position has been supportive of the measure, but it remains to be seen whether and to what degree these apparent intra-coalition disagreements will affect the country’s position in the Council. According to a Commission spokesperson, Belgium has not expressed any formal intention to withdraw from the group of Member States currently negotiating on the FTT.
“Powerful Google tax opponent will urge UK to drop hostility to radical EU change” – 27 January
According to the Guardian, the European Commission will be pushing hard for the establishment of a Common Consolidated Corporate Tax Base (CCCTB) in the EU, despite reservations expressed by a bloc of Member States, including UK and Ireland. The pressure from the Commission’s side is consistent with Commissioner Moscovici’s stated intention to make 2016 the year of tax reform in the EU, but will have a hard time convincing certain Member States to agree on measures that might have negative impacts on their current economic strategies.
Council to discuss Commission proposals to tackle tax avoidance – 9 February/12 February
The Council Working Party on Tax Questions will be discussing the recently published Commission proposals against tax avoidance on 9 February, including the provisions on Country-by-Country Reporting (CBCR) as well as the anti-BEPS Directive. The meeting will take place between relevant attaches from Member States’ Permanent Representations to the EU, and will constitute a preliminary exchange of views and Member States positions at a technical level. During the same week on 12 February the ECOFIN Council of Finance Ministers will have an initial exchange of views on the Commission proposals. The Dutch Presidency is aiming for a deal on the legislative provisions of the anti-avoidance package before the end of its mandate in June, but it remains to be seen how realistic this timeline is, given notably the unanimity rule.
“Netherlands Defends ‘Unlawful’ Port Tax Breaks” – 25 January
According to Tax News, the Netherlands has defended the tax breaks granted to publicly-owned Dutch seaports, ruled as “unlawful” by a Commission decision earlier in January. The Dutch authorities argue that the current competitive playing field of seaports in the EU is un-even, and consequently Dutch seaports are at a competitive disadvantage. The Dutch authorities consequently call on the Commission to ensure fair competition for the sector in the EU.
31 countries sign tax co-operation agreement to enable automatic sharing of country by country information – 27 January
31 countries have signed a Multilateral Competent Authority Agreement (MCAA) for automatic exchange of Country-by-Country Reports (CBCR) in Paris. The MCAA provides for a “consistent and swift implementation” of new standards on transfer pricing reporting as established in the BEPS Action 13. The exchange will occur between national tax administrations, and will enable them to have a more holistic picture of multinationals and their activities, whilst guaranteeing the confidentiality of the information exchanged. At the EU-level, the European Commission will be considering and possibly proposing provisions on public disclosure during the Spring, probably in early-March.
Malaysia confirms its commitment to implement Automatic Exchange of Financial Account Information – 27 January
Malaysia has signed the Multilateral Competent Authority Agreement, thereby formalising its earlier commitments to implement automatic exchange of financial account information by the 2018 deadline. It is the 79th jurisdiction to sign the Agreement, which establishes the “operational framework” for international automatic exchange of information.
OECD Secretary-General Angel Gurría welcomes European Commission corporate tax avoidance proposals – 28 January
The OECD Secretary-General Angel Gurria has welcomed the European Commission’s proposals to tackle tax avoidance in the EU and to implement the OECD BEPS recommendations in a coordinated manner across the bloc. He described the Commission proposals as “entirely BEPS-compatible”, and is convinced that the measures will increase transparency, create a framework for fairer competition as well as a more certain tax environment for businesses in Europe.
Senegal takes key steps towards improving tax transparency – 4 February
Senegal has become the 11th African country and 93rd jurisdiction to commit itself to the Multilateral Convention on Mutual Administrative Assistance in Tax Matters. The Convention provides for administrative assistance in tax matters, including exchange of information on request, spontaneously and automatically, tax examinations abroad, as well as tax collection assistance. It moreover entails a number of provisions to protect taxpayers’ rights.
“Google cuts £130 million tax deal with UK” – 22 January
As reported by a number of news agencies such as Politico, Google has reached a tax settlement deal with the UK HMRC, amounting to a total of £130 million. The sum is supposed to reflect ten years’ worth of taxes. The move comes in a context where the European Commission is actively tackling multinationals’ tax practices through state aid investigations as well as a recently launched set of proposals to combat tax avoidance.
“Japan To ‘Definitely Carry Out’ Consumption Tax Hike” – 25 January
According to Tax News, the Finance Minister of Japan has confirmed that the government will indeed introduce consumption tax increases. The hike will increase the tax from 8% to 10% starting April 2017. The Minister had earlier defended the move as a necessary measure in order to restore investors’ trust in the Japanese economy.
“India’s Tax Simplification Panel Tables Recommendations” – 25 January
According to Tax News, India’s tax simplification committee has launched a first set of recommendations aiming to improve the country’s tax system and to reduce disputes between companies and the national tax authority. The first batch of recommendations is considered to address issues of a more simple nature, whilst additional recommendations on what are considered to be more complex areas is expected for the second batch.
“UK Treasury Committee To Investigate BEPS” – 26 January
According to Tax News, a Committee of the UK Treasury will be investigating into BEPS challenges potentially affecting the country’s corporate tax base. The Committee Chair Andrew Tyrie stated that much more can be done to tackle some multinationals’ harmful tax practices, including making tax systems more practicable, coherent and stable. The announcement comes as a follow-up to the £130 million tax settlement deal recently struck between Google and the UK HMRC.
“France, India Announce Joint Tax Evasion Crackdown” – 27 January
According to Tax News, France and India have concluded an agreement aimed at deepening their cooperation on taxation, and in particular with regard to the prevention of tax evasion. The agreement includes additional provisions to strengthen exchange of information between the two countries. The countries will moreover look into further cooperation and mutual capacity building in the future, especially in the context of their commitments made at the G20.
“WHO Recommends Sugar Tax” – 27 January
According to Tax News, the World Health Organization (WHO) has issued a recommendation in favour of sugar taxes for sweetened drinks. The recommendations come in the form of a report, which concludes that sugar taxes would be appropriate means of tackling public health challenges such as obesity through shaping consumption patterns.
“China Confirms Push To Replace Business Tax With VAT” – 27 January
According to Tax News, China will be implementing a nation-wide VAT to replace its business tax this year. The confirmation comes from a meeting of the Chinese State Council, where decision-makers discussed further steps towards achieving the shift. Chinese authorities expect the move to be particularly beneficial to the country’s service and hi-tech sectors.
“European Commission to examine Google’s UK tax deal” – 28 January
According to the Financial Times (article only available to subscribers), the European Commission will investigate the £130 million tax settlement deal between Google and the UK. The announcement follows calls by the Scottish National Party (SNP) for the EU to conduct such an investigation. The European Commission has already announced its intention to look further into the arrangement in order to assess whether a more thorough investigation is necessary.
“EU plan could call UK VAT exemptions into question” – 28 January
According to the Guardian, the European Commission’s plans to review and reform EU VAT rules could threaten UK’s 0-rate regime for items such as food and medicines. Commissioner Pierre Moscovici has declared the Commission’s intention to conduct a thorough review of existing provisions and their application, and could question the 0-rate as a breach to the current EU minimum reduced rate of 5%. Commissioner Moscovici was quoted as stating that a “zero rate is not the best idea”.
“The impact of BEPS on financial services” – 28 January
ICAEW’s Economia has published an article reflecting on the potential effects of the BEPS project recommendations on the financial services industry. The article raises concerns in particular with regard to the potential harmful effects of limitations to interest deductibility, and notably discusses the definition of a “public benefit” exclusion which would allow an exemption from the new rules.
“US blasts Brussels over tax probe bias” – 29 January
According to the Financial Times (article only available to subscribers), the US has issued strong criticism against the European Commission’s investigations and rulings on multinationals’ tax practices, blaming the EU executive for unfairly targeting US companies such as Starbucks, Apple and Amazon. Robert Starck from the US Treasury argues that the retroactive taxation of companies as ordered by the Commission on recent famous state aid cases “calls into question the basic fairness of the proceedings”.
“Tories lobbying to protect Google’s £30bn island tax haven” – 30 January
According to the Guardian, the UK Government lobbied the European Commission in order to exclude Bermuda from the EU’s consolidated list of non-cooperative jurisdictions on tax matters. The information is based on leaked documents which reveal that the UK government considers the inclusion of Bermuda on the consolidated list as well as potential sanction measures as “unhelpful”.
“Osborne backs push for multinationals tax transparency” – 31 January
According to the Financial Times (article only available to subscribers), George Osborne has expressed support for public Country-by-Country Reporting (CBCR). To what degree this position will hold if the Commission makes proposals for public disclosure remains to be seen. The European Commission is expected to make a decision on public disclosure in Spring, most likely in early-March, based on the results of an impact assessment on the potential effects of such a measure on the competitiveness of the EU economy.
“Google’s French tax settlement will top UK’s” – 2 February
According to Politico, Google is currently negotiating with French authorities a tax settlement deal comparable to the one recently reached between the company and the UK. The French Minister of Finance Michel Sapin announced that the settled amount would probably be higher than the £130 million settlement with the UK. For the same occasion, he called for more harmonised tax rules in the EU in order to better tackle against multinationals’ tax planning practices.
“Poland Announces Special Tax On Supermarkets” – 3 February
According to Tax News, the Polish government has announced a new special turnover tax on supermarkets. The tax rate is progressive depending on a company’s revenue, and may amount to 0,7% or 1,3% of a firm’s monthly revenue. A special 1,9% tax rate would be applicable to supplies during weekends and public holidays. Smaller companies with a monthly revenue below PLN 1,5 million (approximately €400.000) would be exempt from the tax.
“Greece Proposes 50 Percent Top Rate Of Tax” – 5 February
According to Tax News, the Greek government is planning to increase income tax and social security contributions with the view of avoiding cuts to pensions. The measures include the introduction of a new 50% tax category applicable to annual income exceeding 60.000, whilst the current top rate of tax is 42% on annual income exceeding 42.000.
“A ‘major success’ would be a fair tax system, not this tiny Google deal” – 25 January
Nils Pratley has criticised in his Guardian article the £130 million tax settlement deal recently reached between the UK and Google. He regrets that the agreed amount is “tiny” in comparison to Google’s operations, that Google has not been obliged to change its business structure, and that there is no transparency in how HMRC calculated the final sum. He consequently calls for a tax system for multinationals that is “transparent and fair”.
Australia: “Big business accused of using ‘straw man’ arguments against tax avoidance crackdown” – 25 January
According to the Guardian, Australia is currently undergoing similar investigations and efforts to reform corporate tax practices as currently planned in the EU. The Australian Treasury and businesses have been arguing against a proposed removal of companies’ rights to tax deductions on interest payments, arguing that the move would be bad for the economy and incentivise offshore investment. Tax Justice Australia, a civil society organisation, has rejected the arguments, stating that the Treasury and businesses are merely putting forward “straw man arguments”.
“Unilever boss warns UK against sugar tax” – 25 January
According to the Guardian, Unilever’s CEO Paul Polman has warned against a wide-spread introduction of sugar taxes, arguing that there is weak evidence for the beneficial effects of such schemes on obesity rates. At the same time, certain MPs and the UK National Obesity Forum maintain that sugar taxes have potential in tackling the obesity crisis.
“Belgian MNCs Gearing Up For BEPS” – 25 January
According to Tax News, a majority of tax directors of multinationals located in Belgium fear the potential negative impacts of the BEPS project recommendations, expressing concerns in particular with regard to administrative burdens and costs. The survey was conducted by Deloitte, and targeted over 800 tax directors across Europe. 71% of the Belgian respondents moreover stated their intention to re-assess their companies’ international tax strategies.
EY “advises Google, Apple, Facebook and Amazon on tax affairs” – 27 January
An article published in the Independent focuses on the wide-spread tax consulting services provided by Ernst & Young (EY) to a number of large multinationals, and consequently refers to the Y as “the most prevalent accountant in the current tax controversy”. The article reveals some details on the compensation practices and billing amounts on the services provided by EY to multinationals including Google, Apple, Facebook and Amazon.
“Alphabet and Apple spell global tax war” – 28 January
John Gapper writes in the Financial Times (article only available to subscribers) about the potential dire implications of the current tax crackdown in Europe to the international tax system formed in 1928 and based on the principle of taxes being paid where profits are generated. The considerable disagreements between US authorities and their European counterparts on the tax treatment of multinationals (many of which are US-based) could lead to what Mr. Gapper refers to as a “global tax war”.
“EU’s anti-tax avoidance package likely to fail, say NGOs” – 28 January
As reported notably by Euractiv, a number of civil society organisations have voiced critical views on the European Commission’s Anti-tax avoidance package (ATAP) published on 28 January. Comments raised by civil society organisations such as Eurodad, ActionAid and Transparency International express great regret to the Commission’s decision to consider public Country-by-Country Reporting (CBCR) only at a later stage during Spring, and fear that the proposed provisions will lead to a new round of “race to the bottom” on corporate tax rates. The European Confederation of Trade Unions (ETUC) for its part also regrets the lack of public CBCR, and overall refers to the provisions as taking two steps forward (obligatory exchange of CBCR information, establishing the principle of profits paid where generated in EU law) and two steps back.
Transparency International: http://www.transparencyinternational.eu/2016/01/european-commissions-new-proposal-on-corporate-tax-avoidance-does-not-deliver-real-transparency/
- 18/02/2016, Time for Action! How the Commission’s Action Plan will shape VAT in Europe, Federation of European Accountants – FEE, 10:00-14:00, Brussels.
- 18/02/2016, No taxes, no development: Ways to a just taxation of multinational corporations, FES et al., 09:00-17:30, Berlin.
- 9-11/03/2016, Global Tax Policy Conference, Irish Tax Institute and Ash Center (Harvard Kennedy School), Dublin.
- 18/04/2016, Reforming regulation of professions: results of mutual evaluation and way forward, European Commission, Brussels.