Weekly Tax News – 21 May 2018

Bahamas and St Kitts and Nevis to leave the EU tax blacklist

On Friday 25 May, the European finance ministers are expected to agree to remove Bahamas and St Kitts and Nevis from the European blacklist of non-cooperative jurisdictions in taxation. These countries will be included in the grey list of countries which have committed to take corrective actions to comply with EU requirements. The issue was discussed and approved at the meeting of the national ambassadors to the EU (Coreper) on 15 May.

Council’s refuse to cooperate with the TAX3 committee

The TAX3 committee has received refusals from various representatives of the Council who have been invited to the public hearing arranged for Tuesday 15 May. The Bulgarian Presidency declined the invitation to its finance minister, proposing to replace him with the minister to the Bulgarian Presidency of the Council of the EU or the vice-minister, instead. Furthermore, the Bulgarian presidency referred to the sensitivity of the Council on tax matters and the clear distribution of roles between co-legislators.

Member States allegedly push for global solution to tax digital giants

At an informal meeting of the European finance ministers in Sofia the digital tax proposal by the Commission was discussed behind closed doors. France has been strongly advocating for taxing the revenues of the digital giants like Facebook and Google but is now losing allies to the fear of US retaliation measures. Member States like Germany, Denmark, Finland, Sweden, Ireland and Luxembourg are backing off and rather pushing for a solution on OECD level. Poland, Portugal, Spain and Italy are rallying around France arguing that a tax rate at 3 percent would bring in €5 billion a year.

MEP’s reactions to Union report on McDonald’s tax strategy

European and American unions are targeting McDonald’s tax optimisation practices. According to a report published on 14 May 2018, the fast-food giant has relocated its European headquarter from Luxembourg to the UK, just after the starting of state aid investigation launched by the European Commission in 2015. Furthermore, the report states that the new structure is so opaque that the new tax base is currently unknown. Eva Joly (Greens/EFA MEP), reacted to this report claiming that it shows that companies are continuing to exploit loopholes in tax legislation and that the UK may become the biggest tax haven on the EU’s doorstep. Furthermore, a joint statement of S&D Group required that “representatives from McDonald's must come to the European Parliament and explain these practices to the Parliament's special committee on tax.”

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EP to debate on the disintermediation opportunities offered by blockchain

On 16 May, the Industry Committee adopted a draft non-legislative resolution presented by MEP Eva Kaili (S&D) entitled "Distributed Register and Block Chain Technologies: Building Confidence through Disintermediation". This draft resolution, together with an oral question, should be debated in plenary. In this non-legislative draft resolution, MEPs believing that the technology of distributed ledgers is synonymous of reducing intermediation costs for SMEs and start-ups, call for the EU to become a world leader in this field. They also insist that the blockchain could not be limited to cryptocurrency only and should be promoted for many other sectors (energy, supply chains, etc.).

This draft non-legislative resolution should be the subject of a formal vote and a debate with the Digital Commissioner, Mariya Gabriel, during the June plenary.

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