The EU Tax Commissioner highlighted that it is essential for the European Union that any global agreement on international corporate tax reform also fits the particular needs and situations of member states and the EU as a whole. This means shaping a solution that both respects the EU single market rules and benefits the single market.
EU member states are trying to find points of convergence ahead of international talks on digital taxation, but there is disagreement on when any formal EU position should be advanced. Therefore, on May 7, the EU tax commissionare suggested that Member States find common voice on digital tax.
With regard to the OECD proposal on digital taxation, the commission said that the EU should try to calculate the impact that reallocation of taxation rights and minimum corporate taxation would have on individual member states’ revenues. A better understanding of this would help the OECD draft the scope and design of the proposals in the best interests of all of the EU member states.
Furthermore, the OECD’s reforms should also consider the consequences of compliance costs, arguing that solutions must be simple and clear enough for both businesses and tax administrations to implement. Finally, the OECD’s proposals need to account for the needs and requirements of different stakeholders, reconciling “a wide range of interests in the best possible way.
While the OECD is finishing its part, the Commission suggests that the EU can either join the debate and shape the OECD agreement or be an observer. However, noting the tax analyst report, the member states allegedly were not prepared for the discussion and mostly reiterated known positions. Some member states argued that tax is a national competence and advised against advancing an EU position. Nordic countries argued that a common EU position should only be put forward after there is an OECD agreement on a digital taxation, meaning when the time comes to transpose the global solutions into EU law.
Therefore, the talks will thus focus on trying to find “convergence points” ahead of the international talks, rather than a “common EU position”. Finance ministers will discuss the issue during a meeting of the Economic and Financial Affairs Council May 18.
Sources: European Commission
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