The Director of the OECD’s Centre for Tax Policy and Administration, Pascal Saint-Amans, dispelled doubts on Friday 24 April by stating that the COVID-19 pandemic did not disrupt the timetable for international negotiations on digital taxation (see EUROPE 12416/20).
The goal remains to have an agreement by the end of 2020, he said at an online conference organised by consultancy firm Jericho Chambers, acknowledging the difficulty of negotiating at a distance.
In recent weeks, there have been calls for the postponement of negotiations until after the crisis. For Pascal Saint-Amans, there is no reason to interrupt the negotiations, all the more so as the Finance Ministers of the G20 countries have only recently recalled that the subject continues to be one of their priorities (see EUROPE 12467/5).
Return of unilateralism?
While the financial crisis of 2008 has led to an increase in multilateralism on the tax front, Pascal Saint-Amans believes that “the landscape has changed” and that the trend is now more towards nationalism.
For the future, he sees “threats” and, no doubt, new unilateral measures on digital taxation. Nevertheless, he remains convinced that countries will eventually return to multilateralism.
This is the whole “taxation paradox”, explained Pascal Saint-Amans: “to protect your sovereignty, you need to limit it”. Every country is sovereign, but the economy being global, every country needs to know what is happening on the other side of the border and cooperation becomes inevitable.
Rethinking tomorrow’s taxation
This crisis should also be an opportunity to rethink tomorrow’s taxation system, various speakers affirmed.
According to the president of Ex’Tax, Femke Groothuis, tax measures may not be part of the “immediate solution”, as the priority must be to help those who need it most, but in the medium and long term, she believes it will be necessary to start thinking about new tax systems in order to be ready for the next crisis.
For Robert Palmer, executive director of Tax Justice Network, the crisis should also play a role in tax transparency.
“The public is particularly angry at the idea that companies that were not contributing in good times are now asking for bail outs when things get bad”, he said.
Several countries, such as France, Poland and Denmark, have also announced that companies based or with subsidiaries in tax havens will not be eligible for economic support from the State to deal with the crisis.
However, according to Robert Palmer, these measures do not go far enough, since they use the European ‘black’ list of non-cooperative jurisdictions in the tax field as a reference, which excludes European tax havens, such as Luxembourg, he regretted. (Original version in French by Marion Fontana)