Weekly Tax News – 23 November 2020

MEPs discuss tax tools to strengthen economic recovery

On 16 November, the FISC Committee of the European Parliament held a hearing on the role that tax policy should play in the European recovery from the COVID-19 economic crisis. Grace Perez-Navarro (Deputy Director of the OECD’s Centre for Tax Policy and Administration) highlighted that every country has its own peculiarity and that no global solution can be recommended. However, she remarked that some core points, such as fighting tax fraud, reviewing labour taxation and using tax tools to combat climate change, should be discussed and agreed at international level. Liina Carr (Confederal Secretary of the European Trade Union Confederation ETUC) advocated in favour of a tax on billionaires and a minimum effective corporate tax rate of 25% to sustain the recovery. Joaquim Miranda Sarmento (Professor at the University of Lisbon) supported the use of EU funds to temporarily reduce taxes in the economic sectors most affected by the pandemic and for the families that are struggling. The discussion with MEPs then touched upon specific measures such as the taxation of the digital economy, the CCCTB and a possible temporary reduction of VAT rates in certain EU Member States.

German Presidency reaches consensus on DAC7

On 20 November, Benjamin Angel (Director for direct taxation tax coordination, economic analysis and evaluation at DG TAXUD) confirmed in a tweet that consensus has been reached between EU Member States on the Commission’s proposal on DAC7. The proposal provides for an obligation for digital platforms to transmit to the tax authorities the revenues generated by service providers or supplier of goods using their platform. The formal adoption should take place in early January, after the European Parliament delivers its opinion.

OECD MAP statistics released

On 18 November, the OECD has released the latest mutual agreement procedure (MAP) statistics covering 105 jurisdictions and almost all MAP cases worldwide. The statistics show that in 2019 almost 2.700 new MAP cases were started, well more than in 2018 (+ 20% for transfer pricing cases and +10% for other cases). Tax authorities were also able to close more cases in 2019 compared to 2018, though the they could not keep up with the increase in new cases. Only 2% of the MAP cases were closed without finding a mutual agreement, while 85% of transfer pricing cases and over 70% of other cases were fully resolved. On average, MAP cases closed in 2019 lasted over 2 years (25 months), though more than one-fifth of the 2019 end inventory has been pending for over 4 years.

JURI Committee adopts report on corporate governance

On 16 November, the members of the European Parliament’s Committee on Legal Affairs (JURI) have approved the own-initiative report on sustainable corporate governance (2020/2137(INI)). The text drafted by MEP Pascal Durand (Renew Europe, France) calls on the European Commission to review the Non-Financial Reporting Directive to extend the scope by including all large listed and unlisted companies established in the EU. On tax transparency, the text remarks the need for introducing a country by country reporting (CbCR) obligation for certain company accounting data on an annual basis and for each tax jurisdiction in which they operate. The report calls on the Commission to present a legislative proposal to ensure that the duties of directors include the long-term interests of the company as well as those of employees and other relevant stakeholders. According to the text, the long-term interest of the company should include the significant impacts that companies could have on the environment, climate, social issues and issues relating to employees, human rights and corruption.

ETAF Tax Conference 1 December 2020