The EU executive on Tuesday, May 18 adopted a plan for a more unified corporate tax regime across the bloc, which the 27 national systems are struggling to cope with in a world where cross-border business, often via the Internet, are commonplace.
According to his proposal, some large companies operating in the EU would have to publish their effective tax rates to ensure greater transparency, and there would be new anti-tax avoidance measures to tackle the misuse of shell companies.
“It is time to rethink taxation in Europe,” said Paolo Gentiloni, European Commissioner for the Economy, in a declaration.
“As our economies shift to a new growth model… our tax systems must also adapt to 21st century priorities. “
Governments around the world are desperate to raise additional revenues to rebuild their pandemic-ravaged economies, and corporate taxes have become an obvious target after decades of decline.
The Organization for Economic Co-operation and Development (OECD) is due to agree in June on global rules on where to tax large multinational companies like Google, Amazon or Facebook, and at what minimum effective rate.
The OECD aims to prevent governments from reducing tax rates competitively to attract investment and to create a means of taxing profits in countries where customers are located, rather than where a company establishes its business. office for tax purposes.
The European Commission plans to use the OECD agreement as a stepping stone towards more unified rules for business taxation across the EU.
His plan would also tackle the leverage bias in current corporate taxation, encouraging companies to finance their operations with equity rather than debt.
EuroCommerce, which represents the European retail and wholesale sectors, welcomed the plan, saying the different tax regimes are a major obstacle to costs in the EU’s single market.
“The digital transformation of our ecosystem, and the economy as a whole, needs a tax system that matches it,” he said in a statement.
The European Commission’s latest plan will now be submitted to member states and EU lawmakers for approval. Its plans for European rules on corporate taxation have already failed, because the setting of tax rates is a jealously guarded prerogative of national parliaments.
The plan, dubbed BEFIT – Business in Europe: Framework for Income Taxation – will provide a single corporate tax regulation for the EU, the Commission said, adding that it will allow for a more equitable distribution of taxing rights between EU countries. It will replace an existing proposal for a common consolidated corporate tax base (CCCTB), which will be withdrawn.
Anti-poverty activists have applauded the Commission’s decision, saying it advances global tax negotiations. “With this plan, the EU sets the tone for global tax reforms. Now it is up to the Commission to act, ”said Chiara Putaturo, Tax Officer at Oxfam EU.
“The unprecedented COVID-19 crisis means that the EU must step up its tax cooperation and that European countries must no longer sabotage the fight against tax evasion,” she said.
“By stopping the aggressive race to the bottom in European countries and redistributing tax revenues to public services such as hospitals and schools, we can help bridge the inequality gap. “
[Edited by Frédéric Simon]