On Wednesday 28 April, the European Parliament welcomed new US proposals to push forward OECD negotiations on international tax reform (see EUROPE 12694/11).
MEPs were asked to vote on an own-initiative report drafted by Martin Hlaváček (Renew Europe, Czech Republic) and Andreas Schwab (EPP, Germany) on digital taxation, which was adopted by the European Parliament’s Committee on Economic and Monetary Affairs (ECON) at the end of March (see EUROPE 12684/24).
In general, the text supports an international agreement at the OECD by June 2021 on the two pillars of international tax reform, but also asks the EU to have a plan B in the event of failure.
Three amendments to the text, tabled by the rapporteurs, were adopted on Wednesday during a plenary session to reflect recent developments in international negotiations and to welcome the renewed commitment by European Council members on 25 March to a European digital levy (see EUROPE 12685/6).
One of the amendments aims to welcome the new impetus given to the OECD negotiations by the US administration’s recent proposals to “strongly encourage nations to adhere to a global agreement implementing minimum tax rules worldwide”. Another invites the Commission to carefully analyse the implications of the new adjustments proposed by the US to Pillar I of the reform (digital taxation).
“The recent moves by the US administration show signs of positive changes. Hopefully, progress towards a solution for global digital taxation. But we are not there yet”, said Martin Hlaváček during the debate prior to the vote.
European Commissioner for Economy Paolo Gentiloni also welcomed the recent decision by the US to withdraw its proposed voluntary ‘Safe Harbor’ scheme (see EUROPE 12692/19) along with its new ideas on simplifying and broadening the scope of Pillar I (digital taxation) reform to capture the largest and most profitable multinationals on a global scale.
“An agreement on Pillar I along this line covering the global sharing of the taxable base of six to seven digital companies should not prevent the EU and its Member States from adopting a digital levy, which has a different scope and is needed to restore the level playing field in the Single Market and contribute towards financing the recovery and resilience of the EU economy”, he said.
In this respect, he assured that the Commission was continuing to work on its proposal for a ‘digital levy’, which will serve as a new own resource for the EU budget (see EUROPE 12685/25) and which will be presented “by mid-2021”. He added: “We will strive to develop an approach that will not interfere with the OECD process”.
Mr Gentiloni also acknowledged that, for Pillar II (minimum taxation), the US government’s announcement on possible US tax reform also creates “a new dynamic”.
“We will redouble our efforts to reach an agreement at global level both on reallocation of taxing rights and on minimum effective taxation by mid-2021”, he assured MEPs.
At the time of going to print, the results of the final vote on the European Parliament’s report were not yet known. (Original version in French by Marion Fontana)