Weekly Tax News – 11 May 2020

European Commission proposes to defer tax measures to fight COVID-19 crisis

On 8 May, the European Commission has proposed the postponement of several tax measures in order to take into account the difficulties many Member States are facing due to the pandemic. The Commission has proposed to postpone the entry into force of the VAT e-commerce package to 1 July 2021 (originally planned on 1 January 2021), in order to give more time to Member States and companies to prepare for the new rules. The Commission has also proposed to defer certain deadlines for filing and exchanging information under the Directive on Administrative Cooperation (DAC). Member States will have three additional months to exchange information on financial accounts of which the beneficiaries are tax residents in another Member State. Similarly, Member States will have three additional months to exchange information on certain cross-border tax planning arrangements. The beginning of application of DAC 6 will remain 1 July 2020 and the reportable arrangements made during the postponement period will have to be reported once the deferral has terminated. Equally, the information on financial accounts to be exchanged under DAC 2 during that period will have to be reported after the deferral has ended.

Commission postpones its “Anti-fraud tax package” to mid-July

On 5 may, the European Commission has published an updated timeline with a list of key policy items. The list includes an “Anti-fraud tax package” to be discussed on 15 July 2020. The package should include three different measures: the Communication on the “Action Plan to fight tax evasion and to make taxation simple and easy”; a Communication on “Tax good governance in the EU and beyond” and the revision of the Directive on automatic exchange of information (DAC7). 

Belgian excludes tax-haven companies from aid program

On 6 May, the Finance Committee of the Belgian Chamber of Representatives approved a legislative bill that follows the path of Denmark, Poland and France, by making public aid to companies conditional on tax warranties. In particular, the text excludes from the public aid programme any company that has a registered office, a subsidiary or a bank account in a tax haven, carrying out banking operations in a tax haven or transactions with undertakings established in a tax haven. The draft law refers to various existing lists of countries with a dubious tax reputation, including the European Union blacklist of countries that are uncooperative for tax purposes.

OECD postpones its international tax reform

On 4 May, during an OECD online event, Pascal Saint-Amans (Director, Centre for Tax Policy and Administration at the OECD) has announced that the plenary meeting of the OECD/G20 Inclusive Framework on BEPS, scheduled for 1 and 2 July in Berlin is cancelled. The meeting was supposed to end with an agreement on the main political features of the international tax reform. A simple virtual meeting to “take stock” is envisaged instead. The plenary meeting as well as the agreement were postponed to the first half of October, before the G20 finance ministers’ meeting on October 15-16. Saint-Amans said that the nature of the package to be presented is still unclear and that the decision on some of the aspects of the reform might be shifted to 2021. Apparently, a growing number of countries push for limiting the reallocation of taxing rights under Amount A of Pillar I only to digital companies, though US and China oppose such ring-fencing. Saint-Amans also talked about a renewed impetus to Pillar II from a number of countries. The OECD hopes to publish an impact assessment by the end of summer, though many members of the Inclusive Framework are not in favor of releasing the data.