On Thursday 23 June, EU leaders decided to grant EU candidate country status to Ukraine and Moldova. Both countries applied for membership in the weeks after Russia invaded Ukraine. If the decision to grant the EU candidate status was quick, however, the leaders warned that the road to EU membership will be long. The European Council invited the Commission to report to the EU Council on the fulfilment of the conditions set for each country in the framework of its regular enlargement package, reportedly scheduled for the Autumn. The EU Council will decide on the next steps when all these conditions are fully met, the leaders warned. The presidents of the two countries, who met with the European Council, welcomed the EU Council’s decision. “This is a unique and historical moment in EU-Ukraine relations”, the Ukrainian President, Volodymyr Zelensky, reacted on Twitter.
During a debate in the European Parliament’s plenary session on Thursday 23 June, several MEPs called to set up an enhanced cooperation between EU Member States, as Hungary - after Poland – vetoed at the last Ecofin Council on 17 June the adoption of the directive implementing the OECD agreement on the minimum taxation of multinationals. Enhanced cooperation is a procedure where a minimum of 9 EU Member States are allowed to set up advanced integration or cooperation in a particular field within the EU, when it has become clear that the EU as a whole cannot achieve the goals of such cooperation within a reasonable period. During the debate, many MEPs have also complained that unanimity over tax issues leads to blackmail between Member States. On behalf of the French Presidency of the EU Council, the French European Affairs Minister Clément Beaune said he is not opposed to enhanced cooperation and that France also supports the move to qualified majority voting for certain important tax files. He gave assurances that his country is devoting all its efforts until the very last minute of its presidency to reach a unanimous agreement on the directive concerning minimum taxation. The subject was also reportedly discussed in the margin of the meeting of EU leaders.
The European Parliament adopted on Wednesday 22 June a common position on the EU Carbon Border Adjustment Mechanism (CBAM) after repeating a vote which failed earlier this month. In addition to the products proposed by the Commission (iron and steel, refineries, cement, organic basic chemicals and fertilisers), the EP wants CBAM to also cover organic chemicals, plastics, hydrogen and ammonia. MEPs also want to extend CBAM to include indirect emissions, i.e. emissions deriving from the electricity used by manufacturers, to better reflect CO2 costs for European industry. According to the EP’s text, the CBAM would apply from 1 January 2023 with a transitional period until the end of 2026 and Parliament believes it must be fully implemented for the listed sectors of the EU Emissions Trading System (ETS) by 2032 - three years earlier than proposed by the Commission. Moreover, rather than having 27 competent authorities, Parliament believes there should be one centralised EU CBAM authority. Finally, MEPs add that the EU must provide financial support, at least equivalent in financial value to the revenues generated by the sale of CBAM certificates, to support least developed countries' efforts to decarbonise their manufacturing industries. Parliament is now ready to start negotiations with Member States, who already adopted their position on this file.
The COVID-19 pandemic has accelerated the shift to digital services in tax administrations with a 30% increase in digital contacts in 2020, according to a new report from the OECD published on Thursday 23 June. The report highlights that the continuing digital transformation of tax administrations is aimed at automating tax compliance in more areas and further reducing burdens for hundreds of millions of taxpayers. Digital channels are now dominating interactions with taxpayers, with around 1,3 billion contacts via online taxpayer accounts, and more than 30 million contacts via chatbots, according to the report. This is a rapid shift from the pre-pandemic models which may have depended on channels such as post or in-person visits to the tax office, the OECD explains.
On Thursday 23 June, the European Tax Adviser Federation (ETAF) published its answer to the public consultation of the European Commission on an EU framework for withholding taxes, expected to be presented during the first half of 2023. In principle, ETAF acknowledges that withholding taxes as such can reduce the risk of tax evasion and avoidance. However, currently, refund procedures are often complex, lengthy and costly and can discourage investors even more from making investments in certain countries or having to accept double taxation, which can not be the intention of the Single Market. For this reason, ETAF is in favour of harmonised systems of tax relief at source and supports the initiative of the Commission. In its answer, ETAF pointed out that the complex cross-border issues should be addressed with a tax framework that is as simple as possible.
