Update

Tax Policy

Cannot read this email? Open in your browser.June 2019

Tax Policy Update

11 - 24 June 2019

 
 
 

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Get the latest news on SME, tax, technology, audit and sustainable finance.

 
 
 
 
 

The new trend in town? Corporate tax transparency

 
 
 

Johan Barros interviews Lis Cunha from ActionAid on tax transparency what needs to happen at EU level.

 
 
 
 

Highlights

 
 
 
 

  • EU Finance Ministers get update on financial transaction tax
  • G20 Finance Ministers approve way forward on international tax reform
  • All bets open on European Parliament’s permanent tax Committee

 
 
 
 
 

EU Developments

 
 
 
 

European Commission


Commission publishes monthly infringements package

The European Commission has published its monthly infringements package – including again several cases where EU Member States’ tax systems breach EU law.

The cases concern Austria’s VAT treatment of travel agents, Spanish sanctions for failure to report assets held abroad, cigarette taxation in Hungary, Cyprus’ tax rules on imported cars, and Malta’s legislation on the annual circulation tax for cars. Read more

Commission rejects Lithuania’s request for a derogation from the VAT Directive

The European Commission has rejected Lithuania’s request to apply the reverse charge mechanism (RCM) in the petroleum products and additives sector.

Lithuania requested the EU Council to authorise it to apply the RCM in relation to domestic supplies of petroleum products (gas oil and petrol) in order to fight VAT fraud. Lithuania argues that depending on the country, between 5% and 6% of the petrol and gas oil placed on its market is traded fraudulently, depriving Lithuania’s budget of an estimated EUR 20 million per year. Read more

 
 
 
 
 

European Parliament


Future of a permanent tax Committee remains uncertain

European Parliament’s political Group’s are currently negotiating on possible alliances and divisions of power, following the elections in late-May.

A big part of these deliberations is the allocation of MEPs into Committees, as well as the Committees’ chairmanships.

This time around, an additional item on the MEPs’ agenda is whether or not the European Parliament should set up a permanent tax Committee to follow up on and monitor the EU’s tax system and legislation.

During the last parliamentary term, the European Parliament saw a total of 4 ad hoc temporary tax Committees that were set up to investigate and make recommendations on specific tax scandals (Luxleaks, Panama Papers, Paradise Papers etc.). Now the Left Groups together with the Greens are pushing for a permanent structure.

Reportedly, there are different views within the centre-Right EPP and liberal RE (former ALDE) Groups. Some MEPs from these Groups see the already existing ECON Committee as an appropriate forum to discuss tax matters, and would at most support setting up a specific MEP task force for taxation. Such a task force, however, would not have the visibility or authority of a “proper” Committee, nor would Commissioners or Member States’ Ministers be expected to attend its meetings.

All bets are therefore open on whether or not sufficient support can be harnessed for the setting up of a permanent tax Committee.

A decision on the Committees should be expected in the first week of July.

 
 
 
 
 

MEP questions & answers


Commission confirms it is looking into functioning of VAT refunds and reimbursements across Europe and will consider next steps

  • Question by MEP Julia Pitera (EPP/Poland)
  • Reply by Commissioner Moscovici

 
 
 
 
 

Council


Finance Ministers update heads of government on tax progress: overview of all tax files

The EU Finance Ministers have published a document on recent progress on tax files, with the purpose of updating EU’s Heads of Governments.

The document contains a helpful overview of the tax files that the Romanian Presidency has worked on in the past six months. Of particular interest, the document describes what progress has been made on CCTB, the Council’s work on finding a common position to international digital tax negotiations, VAT definitive regime and more. Read more

Finance Ministers discuss financial transaction tax, Germany hopeful agreement can be reached this autumn and revises list tax havens list

The EU’s Finance Ministers received an update on recent progress among the 10 enhanced cooperating EU Member States on a financial transaction tax (FTT) at their 14 June ECOFIN meeting.

At the meeting, Germany’s Finance Minister Olaf Scholz stated that a limited agreement on FTT would be possible this year’s autumn, and for the tax to become effective in 2021.

The main challenge remains that especially smaller countries would only see timid yields from the FTT, which would make implementing and enforcing it not worth the effort.

Therefore, according to a leaked document France and Germany now propose that those countries that would gain more than EUR 100 million from the tax would compensate by allocating a “top-up” to guarantee that even the lowest yielding countries would get EUR 20 million income from the tax.

As a reminder, the new FTT which is based on the French model would apply to purchases of shares on listed companies headquartered in the EU at a rate of 0.2% or more. This scope is narrower than the initial 2011 FTT proposal, which also included derivatives and other financial instruments. The tax would only apply to companies with a market capitalisation above EUR 1 billion. Moreover, IPOs, market making and intraday trading would also be exempt.

Dominica removed from EU blacklist of ‘tax havens’

EU Member States have agreed to remove Dominica from the EU’s blacklist of non-cooperative jurisdictions, or ‘tax havens’.

Dominica ratified the OECD Multilateral Convention on Mutual Administrative Assistance in tax matters and signed the Multilateral Competent Authority Agreement in April this year. As a result, Dominica will start exchanging information with EU Member States from December 2019.

Following Dominica’s withdrawal, the list now consists of Belize, Fiji, Marshall Islands, Oman, United Arab Emirates, Vanuatu, American Samoa, Guam, Samoa, Trinidad and Tobago and the United States Virgin Islands.

 
 
 
 
 

International Developments

 
 
 
 

G20 agrees on way forward for international tax reform

At their 8-9 June meeting in Fukuoka, Japan, G20 Finance Ministers endorsed the OECD’s work plan to take forward international tax reforms – including addressing digitalisation and a minimum tax.

See here for the Communique following the Finance Ministers’ meeting, and here for the OECD’s report to the G20 Ministers on its recent progress on taxation.

The timeline for the OECD’s work is ambitious. In the coming months, the OECD’s aim is to bring countries together to deliver a unified approach and one architecture. An update will be issued in September.

This will be followed by an intermediate report with first elements of impact assessment by October/November 2019. The G20 Finance Ministers will meet again on 17 October 2019, and the Inclusive Framework in January 2020.

The OECD hopes that at these occasions the Inclusive Framework leaders will provide a strong political steering for the direction of the technical work. A final report and consensus-based long-term solution should be ready by the end of 2020.

For further details on the OECD’s work plan, see the last Tax Policy Update from 11 June.

 
 
 
 
 

News in brief

 
 
OECD
 
  Agreement reached on OECD transfer pricing guidelines for financial transactions  
 
European Commission
 
  Commission collects feedback on its communication tools on tax  
 
Council
 
  Updated overview of preferential tax regimes examined by the Code of Conduct Group  
 
Council
 
  Updated overview of preferential tax regimes examined by the Code of Conduct Group  
 
Eurojust
 
  Coordinated EU effort takes down organised crime group suspected of VAT fraud in the drinks market  
 
Court of Justice EU
 
  EU court agrees to hear Google Ireland’s challenge to Hungarian digital services tax  
 
OECD
 
  Serbia signs up to Convention for international assistance on tax matters  
 
OECD
 
  OECD launches new handbook to strengthen tax administrations' capacity to support fight against money laundering and terrorist financing  
 
EESC
 
  EU stakeholders publish position paper on VAT fraud  
 
EESC
 
  EU stakeholders publish position paper on VAT requirements for payment service providers  
 
Dutch News
 
  Dutch Prime Minister threatens companies to increase wages or be deprived of planned corporate tax cuts  
 
Council
 
  Dutch Government announces objectives of its aviation tax conference  
 
OECD
 
  OECD expands transfer pricing country profiles to cover 55 countries  
 
OECD
 
  OECD and IMF publish progress report on tax certainty  
 
 
 

Events

 
 
26/06/19
 
  Corporate governance: A driver of a sustainable economy – Accountancy Europe  
 
05/07/19
 
  The impact of corporate taxes on the European economy - EESC  
 

This curated content was brought to you by Johan Barros, Accountancy Europe policy manager since 2015. You can send him tips by email, follow him on Twitter and connect with him on LinkedIn.

 
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