There will only be one taxation dossier on the agenda of the informal meeting of the European finance ministers this Friday 7 and Saturday 8 April. The Maltese Presidency of the Council wishes to continue the debate on tax certainty.
In a note prepared for the meeting, of which EUROPE has had sight, the Presidency observes that there is clear recognition at international level of the fact that tax certainty is not just necessary but also desirable, given its direct impact on investments.
Among the questions it wishes to address, the Presidency starts by attempting to define tax certainty. It stresses that this is not total immutability in the fiscal field, as changes are necessary to reflect changes in circumstances. However, it considers that changes must be made at a reasonable pace in order to avoid unwanted consequences.
The Presidency asks whether tax certainty is an end in itself or a tool to achieve other objectives. Tax certainty has a direct impact not only on internal investments, but also on international trade and investments, and is certainly an instrument to achieve other aims, particularly economic growth. It can also be an end in itself to allow taxpayers to carry out tax planning. But given the possible abuses, it can be problematic and needs to be controlled, the Presidency explains.
The Presidency goes on to ask how to reduce this uncertainty. The introduction of many new tax laws in quick succession could bring elements of uncertainty in their interpretation, implementation and application, it stresses, calling for a certain period of time to formulate, assimilate and correctly apply the laws in question.
Furthermore, the increased tax transparency of recent years will have the effect of giving the tax authorities more information, allowing them to carry out more audits. Consequently, there could potentially be a significant increase in tax disputes between tax authorities, which themselves create uncertainty.
Tax avoidance means finding and exploiting ambiguities in the taxation rules. To address this, the legislators have adopted new texts. These new texts may create new layers of complexity and ambiguity, which can be exploited by new tax avoidance schemes, the Presidency explains.
The measures recommended by the Presidency to reinforce tax certainty include the increased use of tax rulings, agreements between a tax authority and a company to give it clarity as to how its case will be dealt with by the authorities.
A second action would be to improve the quality of the European tax texts. This will involve the Commission taking time to propose updates to these texts. It will also involve reducing the frequency of amendments to taxation texts. Lastly, the Presidency believes that the international implementation of the OECD's measures to fight tax optimisation (BEPS) should be promoted within the EU. The different levels of implementation of BEPS internationally could work in the favour of those who are dragging their feet, the Presidency argues. (Original version in French by Élodie Lamer)