The European Commission has agreed to give the OECD one last chance to reach an agreement on international tax reform, provided that the new deadline of mid-2021 is the final deadline (see EUROPE 12579/21).
This is what Benjamin Angel, Director for Direct Taxation in the Commission’s Directorate-General for Taxation (DG TAXUD) explained to MEPs in the European Parliament’s Subcommittee on Tax Matters (FISC) on Wednesday 28 October.
“The one thing we want to avoid is this target to become a moving target. It is very clear that we need a deal as early as possible and that this mid-2021 target has to be read as the ‘ultimate deadline’ and not as a ‘rendez-vous clause’ for a potential discussion on setting a new target which itself would be back-loaded”, he warned.
According to Mr Angel, an agreement at the OECD should, for the time being, remain “plan A”. Although he acknowledged that the Covid-19 crisis has had an impact on the course of international negotiations, he pointed out that the Commission would not wait forever.
If it fails at the OECD, it will present many European solutions on both pillars of reform. “While we hope for the best, it is also our responsibility to prepare for the worst”, he said.
The Commission has already committed itself to present proposals for new own resources by June 2021, including a resource based on the digital sector, as part of the EU's post-Covid-19 Recovery Plan. “When designing these new resources, we will take into account the OECD discussion to the maximum possible extent”, Mr Angel assured.
For his part, Pascal Saint-Amans, Director of the OECD's Centre for Tax Policy and Administration, wanted to convey to MEPs his optimism about the outcome of the negotiations. Regardless of the outcome of the November U.S. presidential elections, he said there is a bipartisan will to move forward in the United States.
While Mr Saint-Amans recalled that Pillar II of the reform (minimum business taxation) was technically not linked to Pillar I (digital taxation), Mr Angel stressed the tactical interest for the EU in keeping the two pillars tied together in the same package (see EUROPE 12526/11).
To MEP Christophe Hansen (EPP, Luxembourg), who wanted to know what the OECD would do in 2021 if there was no agreement, Mr Saint-Amans replied that a period of great international tension would then begin and that, at a minima, a forum should be kept open to discuss the consequences of any unilateral measures taken.
“Deadlines cannot be put off indefinitely”, he admitted, adding that the OECD should then note that work on international tax reform is postponed until the political conditions for a resumption of global discussions are in place.
This exchange of views will feed into the preparation of an own-initiative report by the sub-committee on this subject in the coming months, announced Paul Tang (S&D, Netherlands), the Chair of the FISC sub-committee, at the end of the meeting. (Original version in French by Marion Fontana)