The European Commission has published its 2020 European Semester winter package of country-specific reports, which make recommendations for structural reforms at national level. The Commission notes the UK will remain part of the European Semester programme until the end of the transition period for withdrawal from the EU.
Key findings of the UK report, in the chapter on ‘public finances and taxation’, include the following:
the UK’s tax-to-GDP ratio of 33.8% remains well below the GDP-weighted EU average of 39.2%;
corporate income tax receipts, at 2.7% of GDP, are now in line with the EU average, having fallen by 3% between 2017 and 2018;
the effective marginal tax rate for new investment, at 22.7% in 2018, remains one of the highest rates in the EU;
the tax burden on labour (tax wedge) is among the lowest in the EU across the income scale (at 28.93% of the average wage for a two-earner couple with two children);
the UK’s dividend tax regime and large number of bilateral tax treaties provide opportunities for companies to engage in aggressive tax planning;
the UK VAT gap is slightly lower than the EU average (at 10.6% in 2017 against 11.2% in the EU); and
the UK’s environmental tax revenue is in line with the EU average of 2.4% of GDP, but declining as a percentage of total UK tax revenue.
The Commission will now engage with member states on the analysis and conclusions of the country reports, with member states expected to present their national reform programmes in April. The Commission will present its proposals for a new set of country-specific recommendations in Spring 2020.
The European Commission has published its 2020 European Semester winter package of country-specific reports, which make recommendations for structural reforms at national level. The Commission notes the UK will remain part of the European Semester programme until the end of the transition period for withdrawal from the EU.
Key findings of the UK report, in the chapter on ‘public finances and taxation’, include the following:
the UK’s tax-to-GDP ratio of 33.8% remains well below the GDP-weighted EU average of 39.2%;
corporate income tax receipts, at 2.7% of GDP, are now in line with the EU average, having fallen by 3% between 2017 and 2018;
the effective marginal tax rate for new investment, at 22.7% in 2018, remains one of the highest rates in the EU;
the tax burden on labour (tax wedge) is among the lowest in the EU across the income scale (at 28.93% of the average wage for a two-earner couple with two children);
the UK’s dividend tax regime and large number of bilateral tax treaties provide opportunities for companies to engage in aggressive tax planning;
the UK VAT gap is slightly lower than the EU average (at 10.6% in 2017 against 11.2% in the EU); and
the UK’s environmental tax revenue is in line with the EU average of 2.4% of GDP, but declining as a percentage of total UK tax revenue.
The Commission will now engage with member states on the analysis and conclusions of the country reports, with member states expected to present their national reform programmes in April. The Commission will present its proposals for a new set of country-specific recommendations in Spring 2020.
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