Update

Tax Policy

 Cannot read this email? Open in your browser.April 2021 
 

Tax Policy Update

April

 
 
 
 

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Highlights

 
 
 
 

  • Accountancy Europe publishes two papers on tax reform proposals in light of COVID
  • Benjamin Angel gives update on Article 116, tax transparency
  • US proposes to scope international tax reforms to 100 MNEs

 
 
 
 
 

Feature story

 
 
 
 

Accountancy Europe publishes two papers on tax reform proposals in light of COVID

The first of the publications looks into immediate, short-term post-COVID tax measures for both direct and indirect tax that governments should consider in order to support economic recovery. Some of these measures have cross-border impacts so the paper also highlights the role of the European Commission (EC) and international organisations in sharing best practice and coordinating efforts.

The second publication puts forward a number of long-term tax policy recommendations to build a resilient post-COVID tax system. Governments should consider the adequacy of their current tax systems and, after a thorough analysis, whether they should broaden their tax base, put increasing emphasis on certain forms of taxation or introduce new taxes. Businesses and their advisors, in turn, should be prepared to play their part in the post-COVID recovery, acknowledging governments’ roles in their survival and adapting their tax policy to new societal expectations. These include enhanced transparency, forsaking abusive tax practices, and working with tax authorities in a cooperative manner.

 
 
 
 
 

EU Developments

 
 
 
 

European Commission


EC proposes to exempt from VAT vital goods and services distributed by the EU in times of crisis

The initiative aims to maximise the efficiency of EU funds used in the public interest to respond to crises, such as natural disasters and public health emergencies. Once in place, the new measures will allow the EC and EU agencies and bodies to import and purchase certain goods and services VAT-free when those purchases are being distributed during emergency response in the EU.

Read more

Benjamin Angel gives update on Article 116, tax transparency

Speaking at Accountancy Europe’s webinar on 15 April, EC’s Director for direct taxation Benjamin Angel confirmed that Article 116 is still on the table. A proposal was already prepared in 2020, but further robust economic analysis still needs to be made to ensure that the EC has a strong case, Mr. Angel underlined: “burden of proof is on the EC”.

On the upcoming Communication on Business taxation, he confirmed that it will include “new initiatives” to boost tax transparency but could not already elaborate what this might consist of. According to Accountancy Europe’s information, the Communication is postponed to May.

Read more (webinar recording)

 
 
 
 
 

European Parliament


FISC Committee discusses current tax affairs with members of Bundestag

FISC Committee convened for an exchange of views on taxation in a digitalised economy and green taxation with the German Committee on Finance on April 13.

The meeting was organised in two sessions, which provided an opportunity to political groups’ representatives from both the Bundestag and the European Parliament (Parliament) to give their positions on the topics covered. The discussions centred, in particular, around an own-initiative report that the Parliament is currently considering on digital taxation. It also centered on the green taxation part of the report “Shifting the Trillions – A sustainable financial system to facilitate the great transformation” by the Sustainable Finance Committee appointed by the German federal government.

The hearing was part of ongoing efforts in the Parliament to reinforce its cooperation and interaction with national Parliaments on taxation.

Parliament discusses ECA’s report on exchange of tax information

The Parliament’s CONT and FISC Committees hosted the European Court of Auditors’ (ECA) Director of Chamber IV, Ioanna Metaxopoulou and the reporting ECA Member Ildikó Gáll-Pelcz to exchange views on ECA’s recent report on the EU’s exchange of tax information framework on April 14.

Ms Metaxopoulou presented the report’s findings and explained the recommendations that ECA had made to the EC and the Member States. The system for exchange of information is well established but problems remain with monitoring and ensuring the quality of data. She explained that the framework also fails to address all forms of income and assets.

MEPs agreed with the report’s conclusions and inquired how the EC can ensure better implementation of the Directive on administrative cooperation (DAC). EC’s Benjamin Angel confirmed that the EC will carry out an audit of the exchange of tax information framework in light of the report’s advice.

Read more (ECA report)

 
 
 
 
 

MEPs Questions & Replies


EC says public CBCR as condition in public procurement is not permissible…

  • Question by MEP Kira Marie Peter-Hansen (Greens-EFA/Denmark)
  • Reply by Commissioner Breton

…but excluding candidates who fail to comply with their tax obligations is possible

  • Question by MEP Kira Marie Peter-Hansen (Greens-EFA/Denmark)
  • Reply by Commissioner Gentiloni

EC is analysing options to limit companies with links to non-cooperative jurisdictions from public procurement

  • Question by MEP Kira Marie Peter-Hansen (Greens-EFA/Denmark)
  • Reply by Commissioner Breton

EC is looking at whether Swedish risk tax is aligned with EU state aid rules

  • Question by MEP Jessica Polfjärd (EPP/Sweden)
  • Reply by Executive Vice-President Vestager

 
 
 
 
 

International Developments

 
 
 
 

US proposes to scope international tax reforms to 100 MNEs

US President Joe Biden has proposed sweeping global tax reforms that would limit multinational enterprises (MNEs)’ ability to shift profits overseas, while taking steps to forge a landmark agreement on a worldwide minimum tax rate.

The US plan, which provides simpler approaches to the current Pillar 1 and 2 drafts under discussion in the OECD, would affect about 100 of the world’s biggest companies, including tech giants such as Google, Apple, and Amazon. The US is aiming for a global minimum tax rate of 21%.

Overall, many commentators, experts and civil society representatives now see the prospects of a global agreement closer than a few months ago even though the EC and several EU countries have stressed the need to carefully assess the merits and drawbacks of the new US proposals.

Read more

 
 
 
 
 

Other news

 
 
OECD
 
Tax transparency moves forward as no or only nominal tax jurisdictions first exchange information on the substance of entities
 
OECD
 
OECD releases new peer review results on the prevention of tax treaty shopping under the BEPS Action 6 minimum standard
 
OECD
 
OECD tax developments report to G20 finance ministers
 
MNE Tax
 
Groups criticize UN model tax treaty software proposal but for different reasons
 

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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