Weekly Tax News – 25 October 2021

European Commission presents its 2022 Work Programme

The European Commission will present in 2022 a proposal for a Directive implementing the OECD global tax deal on re-allocation of taxing rights (Pillar I), according to its Work Programme for next year unveiled on Tuesday 19 October. The text doesn’t mention a timing for this initiative as the Commission still needs to see the fine print of the OECD Multilateral Convention before taking a decision on the possible design of a Directive. Concerning the minimum corporate tax rate (Pillar II), the Commission already said it aims to present a proposal for a Directive in December 2021.The Commission will also present during the 3rd quarter 2022 a revision of the VAT Directive and of the Council regulation on VAT administrative cooperation. The package will involve reporting obligations and electronic invoicing, the treatment of the platform economy and a single EU VAT registration, the programme said.

MEPs welcome the OECD Global Tax Deal

The European Parliament globally welcomed the OECD Tax Deal found on 8 October. During a debate in Plenary session on Wednesday 20 October, MEPs called the European Commission, the Council of the EU and Member States to facilitate its fast implementation at EU level. Slovenian Foreign Minister Anže Logar and Commissioner Mairead McGuinness pledged that they would do their utmost to meet the ambitious timetable for the agreement to enter into force in 2023. Some MEPs want the EU to go beyond the deal, by setting for instance a 21% minimum corporate tax rate, while others asked the Commission to strictly stick to what has been agreed at OECD level.

Europeans and Americans agree on withdrawing digital taxes

The United States, France, Italy, Spain, Austria and the United Kingdom have reached a deal on the withdrawal of their domestic digital taxes ahead of the implementation of the new OECD Tax deal, the countries announced in a joint statement published on Thursday 21 October. The United States will retroactively - as of 8 October - withdraw trade sanctions which had been imposed to those countries in retaliation for digital taxes. In turn, the five European countries will remove those taxes but only when the new global corporate taxation system enters into force. The agreement also introduces a transitional regime which will apply from the beginning of 2022 until the new tax system is in force.

MEPs call the EU to act in the wake of the Pandora Papers scandal

The European Parliament adopted on Thursday 21 October a resolution calling for actions after the Pandora Papers revelations. The text urges tax administrations in Member States to analyse all the data leaks and launch investigations. The European Commission is also asked to draw the lessons from this scandal and look at whether further legislative action is appropriate at EU level. The text condemns the role of the United States as a hub for financial and corporate secrecy and call for linking the access for the UK financial sector to the EU Single Market for financial services to the respect by the UK of common tax and anti-money laundering standards. It also insists on the role of law firms, tax advisers and wealth managers in assisting high-net-worth individuals in setting up corporate structures to shield their assets and ask the Commission to evaluate the regulatory framework that apply to these professions.

EP shows unity in calling for stronger EU AML rules

The European Parliament spoke with one voice during a debate in Plenary session on Wednesday 20 October, asking for stronger European rules to combat money laundering and terrorist financing. In the wake of the Pandora Papers scandal, they especially supported the creation of a dedicated European authority (AMLA), as proposed by the European Commission at the end of July. The new authority is expected to be established in 2023 and will start its activities in 2024. The direct supervision of certain high-risk financial entities will only start in 2026, which is when AMLA will reach its full staffing, EU Commissioner Mairead McGuinness recalled.

CumEx files 2.0: tax evasion cost governments €150 billion

Three years after the CumEx files were first published in 2018, the international media group behind the investigation led by CORRECTIV published on Thursday 21 October new revelations on this scandal called “CumEx Files 2.0”. The group said that taxpayers around the world have been cheated out of €150 billion through so-called cum-cum and cum-ex schemes that are designed to exploit weaknesses in national tax laws. France is the country most affected by this tax evasion with 33.3 billion, followed by Germany with 28.5 billion, the Netherlands with 27 billion and Spain with 18.8 billion.