On 2 September, Germany’s finance minister Olaf Scholz attended a hearing of the European Parliament’s ECON Committee to present the priorities of the German Presidency.
At the hearing, Mr. Scholz underlined the need for the EU to increase its own sources of income, further exacerbated by the COVID crisis and the July recovery package. He hinted that the Council will discuss as options the so-called carbon border adjustment mechanism (or ‘tax’ – CBT), a digital levy and the financial transaction tax (FTT). Mr. Scholz expressed explicit optimism on the prospect of reaching an agreement on FTT now in the COVID context, and also expressed optimism about reaching international agreement on minimum taxation and at least a blueprint of an agreement on digital taxation.
When asked by MEP Sven Giegold (Greens-EFA/Germany) about public country-by-country reporting (CBCR), Mr. Scholz appeared less hopeful. He contended that the German government coalition does not have a unified position on this. He hinted that Germany might seek ‘further clarity’ on current country positions on CBCR, but Mr. Scholz did not commit to bringing the file on ministerial agendas.
According to the latest time table information from the College of Commissioners, the much anticipated Commission Communication on Business taxation for the 21st century is scheduled to be published on 28 October. As a reminder, the Communication will set out the Commission’s thinking and possible timelines on digital taxation.
On 10 September, the European Commission published its latest VAT gap report. According to the report, EU countries lost an estimated EUR 140 billion in VAT revenues in 2018. The report also notes that although the VAT gap has “improved marginally” in past years, figures for 2020 forecast a reversal of this trend with a potential loss of EUR 164 billion in 2020 due to the effects of the COVID pandemic on the economy. Read more
On 11-12 September, EU finance ministers gathered in Berlin for an informal ECOFIN chaired by the German Council Presidency.
According to preparatory documents for the meeting seen by Accountancy Europe, tax featured high on the agenda of the ministers. The dedicated tax session focused on the following:
More discussions on the financial transaction tax (FTT), “digital levy” and a Common Consolidated Tax Base as EU budget contributions by ” stakeholders who benefit most from the EU Single Market” (at a separate session)
Google intends to pass on the cost of digital services taxes in Europe to advertisers, thus complicating the most recent attempts by governments to capture a bigger slice of the US tech group’s revenues.
It told customers that from November it will charge an additional fee for adverts served in the UK, Turkey and Austria, which explicitly covers the extra regulatory costs in those countries. Read more
On 1 September, the Global Forum on Transparency and Exchange of Information for Tax Purposes (the Global Forum) published nine new peer review reports assessing compliance with the international standard on transparency and exchange of information on request (EOIR).
Interestingly, the Global Forum rates Malta as overall Partially Compliant, despite having been rated Largely Compliant in a past peer review round. The main concerns identified related to the effectiveness of enforcement and supervision activities to ensure the availability of ownership, accounting and banking information, particularly considering the filing compliance rates. Malta also had a large number of inactive companies registered during the review period, which caused delays or failures to provide information to its main EOI partners. Read more
Most interestingly, the documents disclose the areas where further political decisions are still needed. For Pillar 1, these include:
The US Safe Harbour proposal, which remains unresolved and will be addressed once the design of the new taxing right is agreedThis 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.