Update

Tax Policy

 Cannot read this email? Open in your browser.January 2020 
 

Tax Policy Update

13 - 27 January

 
 
 
 

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Highlights

 
 
 
 
  • Croatian Presidency elaborates on its tax priorities for the next months
  • New hurdles on FTT as Austria raises questions about German proposals
  • US and France find truce on digital tax, US optionality proposal not gaining support
 
 
 
 
 

Feature story

 
 
 
 

Croatian finance minister discusses Presidency priorities with ECON

On 22 January, the Croatian Finance Minister Zdravko Marić discussed the Croatian Presidency’s priorities for the next six months with MEPs of the ECON Committee.

On taxation, the minister emphasised that the Presidency’s work will depend on how soon the European Commission will develop new proposals – including the tax elements of the European Green Deal.

For pending tax files, Croatia intends to give new momentum to technical discussions on CCCTB. The Presidency will also seek to progress on the definitive VAT regime.

The MEP Paul Tang (S&D/Netherlands) asked about public country by country reporting (CBCR). The minister did not promise that the file would be added on the finance ministers’ agenda. However, at least he committed that the Presidency will try to find solutions to the ongoing impasse. As a reminder, Croatia was one of the 12 member states to oppose the proposal at the end of last year.

 
 
 
 
 

EU Developments

 
 
 
 

European Commission


‘Jury is still out’ on EU’s carbon border tax, EU trade Commissioner says

The EU’s trade Commissioner, Phil Hogan, has confirmed that no details on a planned carbon border tax (CBT) should be expected before late-2020 to early-2021.

The Commission is currently in the process of conducting an impact assessment on how a CBT could be implemented. It is also consulting interested parties on the matter.

However, there is still clear continuing political momentum from the Commission on green taxes. For example, on 23 January Executive Vice-President Timmermans called on EU countries to tax carbon

 
 
 
 
 

European Parliament


European Parliament finalises its position on special VAT scheme for SMEs

On 15 January, the European Parliament adopted its final position on the special VAT scheme for SMEs proposal. The position passed in Plenary with 592 votes in favour, 22 votes against and 51 abstentions. The file in the Parliament was led by the MEP Inese Vaidere (EPP/Latvia).

The Parliament had already adopted a first opinion in September 2018 but the EU Council decided to consult it again due to the substantial changes it made to the European Commission’s initial proposal, in its position in November 2019.

The European Parliament decided, however, not to comment on the Council position, and with this vote paved the way for the Council position to become EU law.

European Parliament adopts Resolution on Green Deal, calls for tax measures

On 15 January, the European Parliament adopted a non-binding resolution on the Green Deal, published by the European Commission in December 2019. The vote passed by 482 votes in favour, 136 against and 95 abstentions.

In its resolution, the Parliament welcomes the planned proposal to revise the Energy Taxation Directive (ETD), and calls on the Commission to close tax exemptions for kerosene in aviation and maritime sectors. And finally, the resolution insists that the fight against tax fraud, tax evasion, aggressive tax planning and money laundering has an important role to play in reaching the objectives of the Green Deal. Read more

 
 
 
 
 

Council


ECOFIN discusses digital taxation and Green Deal

On 21 January, EU finance ministers discussed in ECOFIN possible common positions for OECD international tax reform negotiations. The discussion point was added to the agenda at the request of Luxembourg, and apparently with little enthusiasm from the Croatian Presidency as the finance ministers already discussed the same topic at their November ECOFIN.

And indeed, nothing revolutionary appears to have emerged from the negotiations. Apparently a consensus of sorts is emerging on the principles for Pillar I, but member states remain divided on working methods. On Pillar 2, EU countries remain divided too. Some countries are eager for Pillar 2 to progress in parallel to Pillar 1, but others are more cautious.

Austria blocks German FTT compromise plan

In the latest turn of events in the financial transaction tax (FTT) saga, Austria has announced that the German compromise proposal is unacceptable in its current form. Austria’s new finance minister, Gernot Blümel, argued that the current proposal does not fulfil the original purpose of FTT, which is to disincentivise speculators.

Instead, the minister fears that the current proposal would hurt small investors. The minister is worried since many Austrians buy stocks as part of their pension planning.

The minister called for a new proposal, lest Austria would withdraw from the FTT negotiations altogether. This would drop the number of enhanced cooperating countries down to 9 – which is the minimum needed. Read more

 
 
 
 
 

International Developments

 
 
 
 

US optionality proposal for Pillar 1 not getting support

According to the OECD’s Pascal Saint-Amans, the US proposal to make Pillar 1 of the OECD-led tax reforms optional “will not fly politically”. He said that after consulting other countries, it is clear that the US preference for making parts of the plan optional will not find consensus. However, Saint-Amans also confirmed that the optionality proposal is still on the table and is “acting as a barrier to discussions”.

France, Italy, Germany and the UK also declared their opposition to the US proposal.

US and France reach digital tax agreement

On 22 January in Davos, US and France reached an agreement on a “joint global framework”. The agreement contains the following elements:

  • France agreed to postpone the payment of its national digital tax until December 2020
  • In return, the US will not impose sanctions on France during the same period
  • Both countries committed to use this new moment of peace to seek an international agreement at the OECD

On 23 January, it also emerged that the two countries had agreed that Pillars 1 and 2 should be approved together as a package.

New tax scandal brewing with Luanda Leaks

On 19 January, a new tax scandal emerged: so-called Luanda Leaks. The International Consortium of Investigative Journalists (ICIJ) published a report on how, Isabel dos Santos, Africa’s richest woman and the eldest child of Angola’s former President, amassed her wealth over the years.

ICIJ claims that the files reveal how dos Santos moved public money out of Angola into “tax havens” and beyond.

The leaks also gained attention at the European Parliament. On 20 January, MEP Sven Giegold (Greens-EFA/Germany) called on the European Commission to end self-regulation of professions such as accountants, and to split the audit and consultancy wings of audit firms

 
 
 
 
 

National Developments

 
 
 
 

US faces domestic digital tax with proposal from Maryland lawmakers

Whilst the US administration is disputing national digital taxes introduced by other countries, one of its own states – Maryland – has taken first steps towards introducing its own digital tax regime.

On 8 January, Maryland legislators introduced a bill proposing a new tax on the revenue of large companies that advertise to individuals located in Maryland through a website or other digital interface. It would apply to companies with $100 million or more of annual global gross revenue. The tax rate would range from 2.5% to 10% of gross advertising revenues. Read more

 
 
 
 
 

News in brief

 
 
The Guardian
 
Netflix accused of aggressive tax avoidance
 
Tax News
 
UK Reports On Adoption Of EU's DAC6 Tax Scheme Reporting Rules
 
USCIB
 
American businesses divided on whether US should sanction French digital tax
 
European Commission
 
EU VAT Forum endorses report on prevention of VAT double tax disputes
 
Bloomberg
 
EU Gets Court Boost in Crackdown on Spanish M&A Tax Breaks
 
 
 

Events

 
 
29/01/2020
 
GRI Tax Standard webinar - GRI
 
13/02/2020
 
The collaborative economy - data exchange with tax authorities - EESC
 
19/02/2020
 
Tax Day 2020 – Accountancy Europe
 

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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