On Monday 8 June, Paolo Gentiloni, the European Commissioner for Taxation, acknowledged that an agreement at the OECD on international reform of taxation (see EUROPE 12497/18) by the end of the year will be difficult.
He was speaking at an online event to present and discuss the proposals from 65 public figures in Italy and Germany for a “zero tolerance policy against tax dumping and money laundering” to fund the EU recovery (see EUROPE 12501/31). The appeal, which was launched by MEP Sven Giegold (Greens/EFA, Germany), had already collected almost 3,000 signatures by Tuesday.
The Commissioner welcomed this “interesting” initiative, both in terms of its content and the standing of the public figures who had signed it. He acknowledged that taxation was “more important than ever” and noted that the Commission would be presenting an action plan on the fight against tax evasion in July (see EUROPE 12478/39).
Among the five proposals put forward by the signatories to the appeal is the introduction at European level of minimum effective corporate taxation and taxation of digital businesses, if international negotiations fail at the OECD.
“It will not be easy to reach agreement on both pillars at the OECD by the end of the year”, the Commissioner acknowledged. Among the difficulties, Gentiloni particularly mentioned the discussions with the United States and their proposal for a ‘Safe Harbor’ that is “radically different” to the one on digital taxation put forward by the OECD Secretariat (Pillar I). He reported “significant problems” with large countries such as India and China with regard to the second pillar, minimum corporate taxation.
“If we don't reach a global agreement by the end of the year, we will discuss our own proposals in 2021”, he stated, but did not mention the recent American threats of trade sanctions against those countries, and even against the EU, that are considering a tax on digital services (see EUROPE 12498/27).
The signatories to the appeal also call on the European Commission to use the “passerelle” clause (Article 116 TFEU) to move to qualified majority voting in the Council of the EU and to the ordinary legislative procedure for taxation.
The Commissioner was somewhat cautious on this matter, however. “The use of Article 116 needs to be assessed carefully”, he said, noting that the article allows the Commission to present a legislative proposal by qualified majority only if it notices a distortion to competition in the single market.
Furthermore, in Gentiloni’s opinion, it is imperative that an issue such as minimum business taxation should be adopted unanimously. Closer cooperation on this issue that only brings together countries with “good tax conduct” would actually be counterproductive, he explained.
Asked about the state of play with regard to the discussions on the Financial Transaction Tax (FTT), which has been under discussion for years (see EUROPE 12477/23), the Commissioner hoped that the group of 10 countries that are involved in closer cooperation will be able to reach an agreement in the next few months. (Original version in French by Marion Fontana)