Weekly Tax News - 24 October 2022

October 24, 2022

EP own-initiative report on “lessons learnt from the Pandora Papers and other revelations”

The Parliament’s Committee on Economic and Monetary Affairs (ECON) on 14 October published an own-initiative report on “lessons learnt from the Pandora Papers and other revelations”. While addressing the role of intermediaries in facilitating tax evasion and tax avoidance, the draft report from rapporteur Niels Fuglsang (Denmark, S&D) welcomes the new Commission’s initiative on securing the activity framework of enablers (SAFE) and calls on the Commission to extend reporting obligations from DAC 6. However, the report explicitly points out that “the so-called big four major accountancy firms – PwC, EY, Deloitte and KPMG – account for 87% of the global tax advisory market share” and states in the following that “visible investigations into the intermediary sector in the EU following the Pandora Papers and the EU’s sanctions on Russian oligarchs” are still missing. Apart from that, the report deals with harmful practices and competition in the area of personal income and wealth taxation, the use of shell companies and trusts, and the exchange of information with jurisdictions that play a role in the Pandora Papers. Amendments to the draft report can be tabled until 22 November, a committee vote is scheduled for 31 January 2023.

Commission unveils its work programme for 2023

On 18 October, Vice-President of the Commission Maroš Šefčovič presented the Work Programme of the Commission for 2023 at the European Parliament’s plenary. Next year, the Commission will focus on further implementing the European Green Deal and the digital transformation. On taxation, the Commission announced that building on the proposal for a single set of tax rules for doing business in Europe (BEFIT), there will be a proposal for a second basket of new own resources. It will also focus on the Implementing Directive on Pillar II, as well as the recast of the Energy Taxation Directive. The AML package also belongs to the Commission’s “priority pending proposals”.

Germany and France want to accelerate discussions on Pillar II

During a press conference on Wednesday, 19 October, the French Finance Minister Bruno Le Maire announced that in case there is no unanimous agreement on Pillar II at the European level before the end of 2022, France and Germany will implement the minimum corporate tax for multinationals on their own. Le Maire, together with the German Finance and Economic Ministers Christian Lindner and Robert Habeck, decided to introduce national legislation if necessary in a virtual meeting of the Franco-German Economic and Financial Council. As Hungary is still upholding their veto, the negotiations on the transposition of the OECD agreement on a global minimum taxation of 15% for large multinational companies have reached a deadlock.

Members of the FISC subcommittee travelled to Luxembourg

To meet with key institutions and various stakeholders and discuss international tax issues, a delegation led by the subcommittee’s Chair Paul Tang travelled to Luxembourg from 20 to 21 October. On the agenda were meetings with representatives from “the Big 4”, as well as with delegations from the Luxemburgish Parliament and the Ministries of Finance and Justice. Additionally, they gained an insight into the current core topics of high-level officials of the Luxemburgish Tax Administrations. The MEPs also visited and had a meeting with the authorities of the “Luxembourg High Security Hub”, a high security storage facility located at the Luxembourg Airport.

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