Weekly Tax News – 12 April 2021

The new US plan for the international corporate tax reform

On 8 April, the US has sent new proposals to the countries involved at OECD level in the negotiations on the international tax framework. The US proposal would tax the world’s largest multinational with revenues above $20 billion per year within the countries where they sell goods or services. According to the US’s estimates, the proposal would be applicable to around 100 multinationals around the world. The document sent to the OECD remarks that the US “cannot accept any result that is discriminatory towards U.S. firms” and this statement serves to clarify that the proposed approach would supersede the existing OECD’s proposal to target automated digital services and consumer-facing businesses. Benjamin Angel (Director for Direct Taxation at European Commission’s DG TAXUD) remarked that the next months will be crucial and that the European Commission will examine the US proposal thoroughly. Earlier last week, Janet Yellen (U.S. Treasury Secretary) expressed once again the support of the US towards a global minimum corporate tax rate, targeting a possible tax rate of 21%. However, Ireland’s Finance Minister and Eurogroup President Paschal Donohoe have already expressed some reservations, noting that legitimate tax competition does have a role to play.

FISC subcommittee to discuss with Bundestag and ECA

This week the FISC subcommittee of the European Parliament will hold two very interesting exchanges of view. On 13 April, representatives of the political groups from the European Parliament and the German Finance Committee of the Bundestag will have a conversation on the European Parliament’s INI report "Digital taxation: OECD negotiations, tax residency of digital companies and a possible European Digital Tax" drafted by MEPs Andreas Schwab (EPP, Germany) and Martin Hlaváček (Renew Europe, Czechia) and on green taxation with reference to the report "Shifting the Trillions - A sustainable financial system to facilitate the great transformation" by the Sustainable Finance Committee of the German federal government. On 14 April, the FISC and BUDG committees will host a joint presentation of the Special Report of the European Court of Auditors (ECA) on "Exchanging tax information in the EU: solid foundation, cracks in the implementation" held by ECA Director of Chamber IV Ioanna Metaxopoulou.

ECA warns that insufficient custom control harmonization hampers EU financial interests

On 30 March, the European Court of Auditors (ECA) has issued a special report assessing the uniform application of customs controls by Member States. The document highlights that the Member States’ customs authorities play a key role in balancing the need to facilitate trade (with faster and seamless import procedures) and the need to apply customs controls. The ECA remarks that the Commission’s 2018 Financial Risks Criteria and Standards Implementing decision (FRC decision) is not designed well enough to ensure that Member States select controls to make on import declarations in a harmonised way. In addition, Member States implement the framework in different ways. The ECA recommended the Commission to enhance the uniform application of customs controls and implement a fully-fledged analysis and coordination capacity at EU level.