Weekly Tax News – 6 July 2020

ETAF Tax Conference on the role of tax policy in response to the COVID-19 crisis

On 30 June, the European Tax Adviser Federation (ETAF) hosted a web-conference on “the role of tax policy in response to the COVID-19 economic crisis”. During the event, Philippe Arraou (President of ETAF) discussed with Patrice Pillet (Head of Unit Value Added Tax of the Commission’s DG TAXUD) and David Bradbury (Head of the Tax Policy and Statistics Division at the OECD) about the lesson learnt from the coronavirus crisis and possible future developments at European and international level from a tax policy perspective. In his welcoming speech, Mr Arraou highlighted the crucial role played by the tax advisers, who are acting as first point of contact between taxpayers and tax administrations who are dealing with the crisis. Mr Pillet highlighted how taxation (and in particular VAT) has been used at EU and national level as a tool to react to the health and to the economic crisis. Mr Bradbury has remarked the work performed by the OECD to gather information and provide recommendation to OECD countries on how to use the different tax tools in the various phases of the crisis. Answering to questions from the audience, the speakers have also elaborated on the OECD international tax reform and on the need to shift towards qualified majority on tax matters at EU level.

No international tax reform at OECD before US elections

On 30 June, Pascal Saint-Amans (Director of the OECD Centre for Tax Policy and Administration), confirmed before the Belgian Parliament that the U.S. have requested a resumption of the negotiations on the international tax reform after the November elections. Apparently, some OECD countries intend to wait for the U.S. elections and then give the process a last chance in early 2021. David Bradbury (Head of the Tax Policy and Statistics Division at the OECD), during the web-conference organised by ETAF, remarked that "it is to be expected that if we do not reach consensus at the international level, we will face a fairly grim future in terms of trade retaliation".

Commission confirms its commitment to revamp VAT system and unanimity rules

On 30 June, during the ETAF web-conference, Patrice Pillet (Head of Unit Value Added Tax of the Commission’s DG TAXUD) explained that the COVID-19 crisis has highlighted once again the necessity to approve some of the Commission’s proposals in the area of VAT. Mr Pillet remarked that the 2018 proposal to give Member States the freedom to set reduced, super-reduced and zero VAT rates would have helped to tackle the crisis. He emphasized the resistance showed by the EU Council in adopting these new measures and thus remarked the need to move towards qualified majority voting in tax matters in order to have a more effective and faster European legislation.

Gentiloni gives a glimpse of the Commission’s anti-fraud package

On 1 July, in a written reply to a question by Marek Belka MEP (S&D, Poland), Tax Commissioner Paolo Gentiloni unveiled some of the contents of the tax package that should be launched by the European Commission on 15 July. Among the possible measures to be proposed by the Commission, the letter mentions a framework for a preventive dialogue between tax administrations for the common resolution of cross-border tax issues faced by SMEs. Gentiloni also stressed the need to use digital solutions as a tool to reduce compliance costs, both for tax administrations and businesses.

The tax priorities of the German Presidency

On 1 July, Germany published its Programme for the Presidency of the Council of the European Union. In the area of taxation, the programme highlights the need for a fair and transparent distribution of the tax burden at EU level. In particular, Germany is committed to follow the OECD work on the international tax reform and to implement the outcome of the negotiations. The German Presidency will also take a leading role in the revision of the directive on administrative cooperation in the field of taxation and in introducing a financial transaction tax at European level.