Weekly Tax News – 16 March 2020

EP postpones discussion on tax subcommittee due to Coronavirus 
During the last week, the European Parliament and European Commission have taken different actions to limit the spread of the coronavirus among their officials. After having relocated the plenary session from Strasbourg to Brussels, the session was limited to only one and a half day. Furthermore, several meetings were cancelled and the annual calendar of the Parliament was modified. One of the consequences of these changes was that the Conference of Presidents that was supposed to discuss the mandate and composition of the subcommittee on taxation of the European Parliament has been postponed. The European Parliament has not yet confirmed whether the creation of the subcommittee will be voted during the plenary session of April.
The UK confirms Digital Services Tax from 1 April

On 11 March, the British government has confirmed the implementation of a Digital Services Tax from 1 April. The levy would be largely in line with the ones of other countries but with a tax rate of only 2% (compared to 3% set by France and Italy). The UK did not clarify if the collection of the tax is going to be postponed towards the end of the year and only collected if a global solution at OECD level will not be reached, as already stated by many other countries implementing this form of tax. London has confirmed its plans to raise £65 million from the tax. On the same day, the US Computer & Communications Industry Association have criticized the decision of the UK stating that “the UK’s decision to follow other countries in pursuing discriminatory taxes against U.S. exporters is unfortunate and will threaten the strong U.S.-UK trade-in-services relationship”.

Bruegel highlights the issues of a possible European Carbon Border tax

On 5 March, the economic think-tank Bruegel, has released a study regarding the possible implementation of an EU Carbon Border Tax. The researchers remark that there is little empirical evidence to justify a carbon-adjustment measure and that energy price differentials do not necessarily result in a relocation of energy-intensive production. To the proposal of the Commission to focus only on carbon-intensive and trade-exposed sectors, the think-tank answered that it would be hard to differentiate covered and non-covered sectors. The study recommends the EU to rather focus on the implementation of measures to trigger the development of a competitive low-carbon industry in Europe in order to reach its climate policy target.