Brussels, 10/10/2013 (Agence Europe) - How can one ensure that member states' tax systems to not hold back the digital economy in the EU? How can one ensure the growth of the digital economy does not undermine fair and efficient taxation by creating an uneven playing field in the single market? How can tax rules be updated to make them suit the digital environment? At a conference in Paris on Wednesday 9 October on taxation in the digital environment, EU Taxation Commissioner Algirdas Semeta answered the question by providing information about the Commission's work. The conference was organised by the French finance minister, Pierre Moscovici, and the French digital economy and small business minster, Fleur Pellerin.
On the first point, the commissioner said the rules would be greatly simplified in 2015 to encourage e-commerce. With the introduction of new VAT invoicing rules on 1 January 2013 to cut admin costs for business by more than €18 billion, the Commission will unveil over the next few weeks a model VAT declaration and simplified procedures for companies, whether or not they operate online. The Commission has made progress on reduced rate VAT, which was tricky because it had given rise to different interpretations and opinions at national level.
On ensuring fair taxation and preventing tax avoidance by internet giants, the commissioner said that the very nature of these companies (global giants dealing in intangibles) was problematic because tax rules go back to the pre-digital age, which makes it easier for them to wriggle out of tax. The rules must change and solutions must be found at global level. The commissioner welcomed the OECD's action plan for tackling tax evasion and transfer of profits that was adopted by the G20 in September (see EUROPE 10916), along with the OECD's special committee on the digital economy, to which the Commission will be contributing. This will help update concepts like permanent establishment, transfer prices and criteria for taxation at source, and should improve the global tax environment, explained the commissioner.
The Commission is planning to continue to act to prevent tax evasion by companies by: unveiling by the end of the year a draft review of the patent company-subsidiaries directive (2003/123/EC); calling for the Council of Ministers to rapidly overhaul the directive on interest payments and dividends (2003/49/EC); and encouraging member states to introduce the anti-tax-abuse rules unveiled by the Commission. There are plans to facilitate e-commerce by encouraging the member states to be more enthusiastic about proposals like the consolidated corporate tax basis to simplify tax systems and ensure better balanced income from taxation of economic activity. A high-ranking reflection group will be set up to examine particular tax problems, explained the commissioner. (FG/transl.fl)