Weekly Tax News – 22 June 2020

European Commission ready for a digital tax, after US quits OECD talks

On 18 June, the Commissioner for Taxation Paolo Gentiloni confirmed that if the United States keeps on blocking an international agreement, “a new European proposal will be put on the Commission's table”. This was not the only reaction to the U.S. Treasury suggestion to take a break from OECD talks on international taxation as government around the world focus on responding to the COVID-19 pandemic. The declaration was followed by a letter sent to French, Spanish, Italian and British Finance Ministers, indicating that the U.S. prefer to withdraw from the OECD negotiations. The French Finance Minister, Bruno Le Maire, described the letter as a provocation to the OECD partners and confirmed that there will be a national digital tax in France in 2020 in case of a failure to reach an agreement at OECD level. The Secretary General of the OECD, Angel Gurría remarked that the “members of the Inclusive Framework should remain engaged in the negotiation towards the goal of reaching a global solution by year end”. He warned that a trade war at this point in time would further hurt the world economy.

European Parliament approved the TAX subcommittee

On 18 June, a vast majority of MEPs (613 in favor, 67 against, 8 abstentions) voted for the establishment of a permanent Tax subcommittee. The subcommittee will be composed by 30 members and will deal with the fight against tax fraud, tax evasion and tax avoidance, as well as financial transparency for tax purposes. The tax subcommittee should start its work in September. The creation of the subcommittee was welcomed by the Tax Commissioner Paolo Gentiloni, who is certain that “this new subcommittee will become a key forum to take forward that fight, in the interest of honest citizens and businesses throughout Europe”.

The tax progress of the Croatian Presidency

On 17 June, the Council has published its conclusions on the progress achieved on tax issues during the Croatian Presidency. The report provides an overview of the progress achieved in the Council during the term of the Croatian Presidency, as well as an overview of the state of play of the most important dossiers under negotiations in the area of taxation. The document remarks that the work during the Croatian Presidency term continued on a number of key files, such as digital taxation, rules on mandatory transmission and exchange of VAT-relevant payment information, simplification of VAT rules for small enterprises, the future of VAT rates, update on the EU rules on structures of excise duties on alcohol, updates to the EU list of non-cooperative jurisdictions for tax purposes.

ETAF Tax Conference on 30 June