The European Commission has presented its new tax transparency package ‘as part of its ambitious agenda to tackle corporate tax avoidance and harmful tax competition in the EU’.
A key proposal concerns the automatic exchange of information between member states on tax rulings, which the Commission said was ‘urgently needed to tackle aggressive tax planning and ensure fair tax competition between member states’. It is proposed that, every three months, national tax authorities will have to send a short report to all other member states on all cross-border tax rulings that they have issued. Member states will then be able to ask for more detailed information on a particular ruling. The aim is encourage ‘healthier’ tax competition, ‘as tax authorities will be less likely to offer selective tax treatment to companies once this is open to scrutiny by their peers’.
Other transparency initiatives include:
assessing possible new transparency requirements for multinationals, although the Commission noted that ‘the objectives, benefits and risks of any such initiative need to be carefully considered’;
reviewing the EU’s code of conduct on business taxation ‘to make it more effective in ensuring fair and transparent tax competition within the EU’;
quantifying the scale of tax evasion and avoidance;
repealing the Savings Tax Directive since this has been superseded by more ambitious EU legislation which requires the widest scope of automatic information exchange on financial accounts, including savings related income (IP/13/530).
The two legislative proposals of this package will be submitted to the European Parliament for consultation and to the Council for adoption. Member states should agree on the tax rulings proposal by the end of 2015, so that it can enter into force on 1 January 2016. ‘Given that the European Council in December 2014 called on the Commission to make this proposal, full political commitment on reaching a timely agreement should be expected.’
The Commission said that the next milestone would be an action plan on corporate taxation which will be presented before the summer. This plan will focus on measures to make corporate taxation fairer and more efficient within the single market, including a re-launch of the common consolidated corporate tax base (CCCTB) and ideas for integrating new OECD/G20 actions to combat base erosion and profit shifting (BEPS) at EU level.
Rob Fontana-Reval, CBI head of tax & fiscal policy, said the CBI supported the measures, but added: ‘It is important that the proposals maintain normal levels of confidentiality that govern the exchange of tax information under current treaties and that the scope of information shared is restricted to formal written rulings. This will ensure businesses and tax authorities can continue having a transparent dialogue without creating an unreasonable burden on authorities that could jeopardise such arrangements.’
Separately, the OECD’s Global Forum on Transparency and Exchange of Information for Tax Purposes has published nine new peer review reports, including a phase 1 supplementary report for Switzerland, which the OECD says demonstrates continuing progress toward implementation of the international standard for exchange of information on request. The OECD has welcomed Switzerland’s recent moves towards greater tax transparency, which it says are sufficient to remove the country from a category of jurisdictions blocked from moving forward in the peer review process. Switzerland will now be assessed on its effective implementation of exchange of information on request; that report is due in the second half of 2016.
The European Commission has presented its new tax transparency package ‘as part of its ambitious agenda to tackle corporate tax avoidance and harmful tax competition in the EU’.
A key proposal concerns the automatic exchange of information between member states on tax rulings, which the Commission said was ‘urgently needed to tackle aggressive tax planning and ensure fair tax competition between member states’. It is proposed that, every three months, national tax authorities will have to send a short report to all other member states on all cross-border tax rulings that they have issued. Member states will then be able to ask for more detailed information on a particular ruling. The aim is encourage ‘healthier’ tax competition, ‘as tax authorities will be less likely to offer selective tax treatment to companies once this is open to scrutiny by their peers’.
Other transparency initiatives include:
assessing possible new transparency requirements for multinationals, although the Commission noted that ‘the objectives, benefits and risks of any such initiative need to be carefully considered’;
reviewing the EU’s code of conduct on business taxation ‘to make it more effective in ensuring fair and transparent tax competition within the EU’;
quantifying the scale of tax evasion and avoidance;
repealing the Savings Tax Directive since this has been superseded by more ambitious EU legislation which requires the widest scope of automatic information exchange on financial accounts, including savings related income (IP/13/530).
The two legislative proposals of this package will be submitted to the European Parliament for consultation and to the Council for adoption. Member states should agree on the tax rulings proposal by the end of 2015, so that it can enter into force on 1 January 2016. ‘Given that the European Council in December 2014 called on the Commission to make this proposal, full political commitment on reaching a timely agreement should be expected.’
The Commission said that the next milestone would be an action plan on corporate taxation which will be presented before the summer. This plan will focus on measures to make corporate taxation fairer and more efficient within the single market, including a re-launch of the common consolidated corporate tax base (CCCTB) and ideas for integrating new OECD/G20 actions to combat base erosion and profit shifting (BEPS) at EU level.
Rob Fontana-Reval, CBI head of tax & fiscal policy, said the CBI supported the measures, but added: ‘It is important that the proposals maintain normal levels of confidentiality that govern the exchange of tax information under current treaties and that the scope of information shared is restricted to formal written rulings. This will ensure businesses and tax authorities can continue having a transparent dialogue without creating an unreasonable burden on authorities that could jeopardise such arrangements.’
Separately, the OECD’s Global Forum on Transparency and Exchange of Information for Tax Purposes has published nine new peer review reports, including a phase 1 supplementary report for Switzerland, which the OECD says demonstrates continuing progress toward implementation of the international standard for exchange of information on request. The OECD has welcomed Switzerland’s recent moves towards greater tax transparency, which it says are sufficient to remove the country from a category of jurisdictions blocked from moving forward in the peer review process. Switzerland will now be assessed on its effective implementation of exchange of information on request; that report is due in the second half of 2016.
