Weekly Tax News – 26 October 2020

France and the U.S. are back to trade disputes

On 18 October, the French Finance Minister, Bruno Le Maire, confirmed once again that since no agreement has been reached at OECD level, France will start collecting the national digital tax starting from December 2020. Last January, Le Maire decided to postpone the collection of digital tax from January to December, hoping for an agreement on the international tax reform. The expected reaction of the United States should focus on putting retaliatory duties on a list of French products worth  $1,3 billion that the United States Trade Representative had published in July, which includes handbags and cosmetics.

Commission’s 2021 tax work programme focuses on Green Deal and Digital levy

On 19 October, the European Commission has presented its 2021 Work Programme. The tax measures that are included in it are deeply linked with the European Green Deal promoted by the Commission. The “package 55” (targeting a reduction by 2030 of 55% of greenhouse emission compared to 1990), will be launched in the second quarter of 2021 and it should include the proposal for a Carbon Border Adjustment Mechanism and the Revision of the Energy Tax Directive. Furthermore, the work programme highlights once again that, during the second quarter of 2021, the Commission will present a proposal for a digital levy and the inclusion of such tax as a new own resource of the EU budget. The Commission is also planning to propose a revision of the tobacco taxation Directive and an amendment of the Directive on general arrangements for excise duties in the second half of 2021.

The European Parliament asks for updates on the international tax reform

On 28 October, the FISC Committee of the European Parliament will hold an exchange of view on the state of play of the reform of the international tax system. The MEPs will have the chance to ask questions on the topic to Benjamin Angel (Director for “direct taxation, tax coordination, economic analysis and evaluation at DG TAXUD) and Pascal Saint-Amans (Director of the Centre for Tax Policy and Administration at the OECD). The focus will be on the recent postponement of the agreement on the international tax reform at OECD level to mid-2021 and its effect on the EU tax policy.

OECD international tax reform would increase global tax revenues

On 20 October, the OECD has published an interesting article on its blog that summarises the findings of the Economic Impact Assessment carried out by the OECD Secretariat. The impact assessment highlights that the implementation of the international tax reform could increase global revenues from corporate income tax by about $50-80 billion per year. Based on the study, Pillar 1 would only lead to a modest increase of global tax revenues while involving a significant change to the way taxing rights are allocated among jurisdictions. However, Pillar 2 would provoke an increase in corporate tax revenues and would reduce the incentives for MNEs to shift profits to low-tax jurisdictions.