European Parliament adopts Pandora Papers draft report
European Parliament (EP) Plenary adopted a draft report on Pandora Papers: lessons learned with 465 votes in favour, 5 votes against and 36 abstentions on 15 June. MEP Niels Fuglsang (S&D/Denmark) prepared the report.
The report puts forward EP’s recommendations for addressing issues identified in the October 2021 Pandora Papers scandal. The recommendations cover the role of tax intermediaries, harmful non-corporate tax regimes, misuse of shell entities, and more.
The report’s recommendations are not legally binding. Still, EC will have to submit a response to EP within the next few months, explaining what action it intends to take.
FISC hearing on achieving EU policy goals through tax incentives
FISC Committee held a public hearing on the role of tax incentives in achieving EU policy goals on 27 June. Guest speakers highlighted that while tax incentives could be the right policy option, such as in the case of market failures, a holistic approach should look at their impact on society. Moreover, business investment responds to factors other than just tax rates alone, such as whether the necessary skills or infrastructure is in place. The speakers underlined any tax incentives in the EU should seek to increase equality between countries and within countries, in addition to fostering the green transition.
FISC discusses draft report on further reform of corporate tax rules
MEP Isabel Benjumea (EPP/Spain) presented her own-initiative report on the reform of corporate taxation rules to her colleagues in the FISC Committee on 27 June. She stressed the importance of reducing the administrative burden and supporting the competitiveness of businesses, particularly SMEs.
Her report focuses on four main measures. She wants to see a regulatory moratorium adopted, to not “legislate more, but to legislate more effectively”. She suggested that competitiveness checks be put in place to analyse the impact of tax measures on businesses. Benjumea proposed using tax exemptions and reductions, and tax incentives to support business competitiveness. She endorses a simplified tax system to reduce the administrative and bureaucratic burden.
MEPs from other political Groups also underlined the need to fight against tax avoidance, evasion and fraud.
MEPs have until 5 July to submit amendments to the draft report. The vote in Committee is scheduled for 24 October.
ECON discusses tax developments with Commissioner Gentiloni
ECON Committee held a structured dialogue with Commissioner Gentiloni to discuss the state of play of EU’s tax policies on 28 June.
At the hearing, the Commissioner confirmed the tax enablers (SAFE) proposal should not be expected until there is an agreement on the Unshell Directive, which remains on the Council’s table. The Commissioner did not hide his frustration, saying that Unshell should be non-controversial and not understanding the Council’s delay. He regretted the Swedish Council Presidency did not achieve great results with the initiative.
On Pillar 1, the Commissioner said the OECD should still be able to reach an agreement by 11-12 July – at least for now. He also reminded there is an agreement for jurisdictions to freeze plans for unilateral measures (presumably regarding digital services taxes). Still, this agreement cannot be prolonged forever.
And finally, on Article 116, the Commissioner reminded that it could be used only to address severe distortions to the Single Market. The Commission has done work on this but is being prudent as they need to be 100% certain of their success, legally speaking. It would be the first time that Article 116 is used for such a purpose, and the Commissioner emphasised that “this is something that we cannot lose”.
ECON Committee adopts draft position on DAC 8
ECON Committee approved its draft report, as amended, on Amending Directive 2011/16/EU on administrative cooperation in the field of taxation (DAC 8) with 43 votes in favour, 4 against and 5 abstentions on 28 June. MEP Rasmus Andresen (Greens-EFA/Germany) prepared the report.
The Council has already agreed on DAC 8, and the Parliament’s opinion is non-binding. However, it is needed before the Council agreement becomes EU law. A final vote in EP Plenary is scheduled for 11 September.