Political groups reach agreement on the von der Leyen II Commission
On Wednesday 20 November, the EPP, S&D and Renew Europe groups in the European Parliament reached a deal on the next European Commission. More than a week after the last Commissioners-designate’s hearings, the three political groups were at a stalemate on the approval of the six Executive Vice-Presidents and the Hungarian Commissioner-designate Olivér Várhelyi. In the so-called "Platform Cooperation statement", the three political groups agree to cooperate for the 10th legislative period of the European Parliament around the following main lines: - Leading Europe based on shared values; - A bold agenda for sustainable growth, competitiveness, preparedness and digital transition; - Effective migration policy and securing Europe ; - Strengthening societies and upholding the EU social model; - Ensuring food security, water and a sustainable environment in an inclusive manner; - Upholding values and strengthening the rule of law; - Leveraging the EU power as a global leader; - Investing in a modern budget aligned with the EU ambitions; - Reforming the EU to enhance its capacity to act. Following this agreement, the relevant parliamentary committees of the European Parliament reportedly validated the nominations of the six Executive Vice-Presidents-designate and the European Commissioner-designate, Hungarian Olivér Várhelyi, in the evening of Wednesday 20 November. They are, however, calling to considerably reduce Olivér Várhelyi’s portfolio. The vote on the new Commission as a whole should go ahead as planned on Wednesday 27 November at noon. To be confirmed, the College of Commissioners needs the endorsement of a majority of the votes cast (rule 129(7) of the EP Rules of Procedure). Ahead of the vote, plenary will hold a debate with European Commission President-elect von der Leyen on her team and programme. Any political group or at least one-twentieth of MEPs may table a motion for a resolution. Once elected by Parliament and after its formal appointment by the European Council via qualified majority, the new European Commission is expected to take up its duties on 1 December 2024.
G20 Leaders commit to cooperate in taxing high-net-worth individuals
On Monday 18 November, G20 Leaders adopted during their meeting in Rio de Janeiro a declaration, including a commitment to cooperate in taxing high-net-worth individuals. “With full respect to tax sovereignty, we will seek to engage cooperatively to ensure that ultra-high-net-worth individuals are effectively taxed. Cooperation could involve exchanging best practices, encouraging debates around tax principles, and devising anti-avoidance mechanisms, including addressing potentially harmful tax practices”, the declaration reads. EU Leaders intend to continue discussing these issues in the G20 and the OECD. In a press release, Gabriel Zucman, director of the EU Tax Observatory, who advised the Brazilian G20 presidency on potential global reforms to the taxation of the super-rich hailed a “historic decision”. “Now is the time to turn words into action and launch an inclusive international negotiation, extending beyond G20 countries, on the reform of the taxation of the super-rich”, he said. G20 Leaders also reiterated their commitment to the swift implementation of the Two-Pillar Solution by all interested jurisdictions, including expeditious negotiations on the final package of Pillar One. “Our international tax cooperation should be inclusive and effective and aimed at reaching broad consensus, maximizing synergies among the existing international fora, while seeking to avoid unnecessary duplication of efforts”, they state.
MEPs and tax experts discuss future EU and international tax policies
On Thursday 21 November, MEPs from the Subcommittee on Tax matters (FISC) of the European Parliament discussed with Benjamin Angel, Director for Direct taxation, tax coordination, economic analysis and evaluation in DG TAXUD of the European Commission, Sanya Gbonjubola and Liselott Kana, Co-Chairs of the UN Committee of Experts on International Cooperation in Tax Matters, what role will the UN play in taxation, how it will cooperate with the OECD and what will be the role of the EU with regards to both fora. The invited experts gave an overview of where tax matters stand at the OECD and UN levels and laid out what their priorities were, going forward. On the UN process, Mr Angel said that it remains to be seen what will be in the Convention and in the Protocols. The first Protocol should tackle cross-border services including the digital sector. This is sensitive as it overlaps with what Pillar One is supposed to achieve, he said. He also recalled that the EU stressed the need for consensus, not because it wants to torpedo the process but because consensus is the only way to create a convention that can be ratified by the broadest number of countries possible, he said. The two UN experts underlined the need for agreements to recognise the diversity of interests and capabilities of implementation, stressing also the benefit of addressing some substantive tax matters at regional level through multi-lateral agreements, instead of at the global level. MEPs raised concerns about the effects the change in administration in the US could have on the application of the OECD Pillar Two agreement, and on future work on reaching an agreement on OECD Pillar One. They also pointed out that the changing tax landscape was creating considerable administrative burdens and this needed to be resolved, notably through the creation of a safe harbour under the OECD Pillar Two. MEPs also asked the experts for their views on how to tax the ultra-rich. Mr Angel replied that this was an area that certainly needed to be worked on in view of the de facto under taxation of the ultra-rich and the need for everyone to be paying their fair share of taxes. However, some prior steps need to be taken, such as more exchange of information at global level on registers of beneficial ownership, and the exchange of information at global level of real estate ownership.
OECD Forum on Tax Administration agrees new initiatives to support digital transformation and enhance tax certainty
The OECD's Forum on Tax Administration (FTA) held its 17th annual Plenary meeting in Athens from Wednesday 13 to Friday 15 November, bringing together tax commissioners and delegates from 53 jurisdictions, including representatives from international organisations, regional tax administration bodies, business and academia. Commissioners focused on opportunities to improve the efficiency and effectiveness of tax administration globally and agreed to developing pilot implementation projects to support automated secure sharing of information between tax administrations and third parties, as well as deepening knowledge sharing on both the trusted use of Artificial Intelligence and the global evidence base to support investments in digital transformation. They also committed to assist the implementation of the global minimum tax and enhancing the tax certainty framework to help achieve early tax certainty and minimise disputes and expand collective efforts on tax capacity building, in co-operation with regional tax organisations, to support the transformation of tax administration globally, including through peer-to-peer engagement on leadership and the promotion of gender balance and diversity.
Average tax revenues in the OECD remain steady in 2023
The average level of tax revenues among OECD countries was largely unchanged in 2023 as governments sought to ease cost-of-living pressures amid growing spending challenges related to climate change and ageing populations, according to a new report published on Thursday 21 November by the OECD. The report shows that the average tax-to-GDP ratio for OECD countries was 33.9% in 2023, 0.1 percentage points (p.p.) below its level in 2021 and 2022, but above its pre-pandemic level of 33.4% in 2019. In 2023, the tax-to-GDP ratio increased in 18 of the 36 OECD countries for which preliminary data are available, declined in 17, and remained unchanged in one. The largest increases (of at least 2.5 p.p.) occurred in Luxembourg, Colombia and Türkiye, while the largest declines (of at least 3.0 p.p.) were observed in Israel, Korea and Chile. The report includes a special chapter on health taxes, which are increasingly common in OECD countries due to their capacity to generate revenues and to improve health outcomes by reducing consumption of harmful products. On average across OECD countries, revenues from excise taxes on alcohol, tobacco and sugar-sweetened beverages amounted to 0.7% of GDP and generated 2.2% of total tax revenues in 2022. However, these revenues declined as a proportion of GDP between 2000 and 2022 in almost all OECD countries, with the largest drop seen in revenues from excise taxes on alcohol. On the same day, the OECD also released its Consumption Tax Trends 2024 report which highlights governments’ ongoing efforts to improve the performance of their VAT systems and combat fraud and non-compliance.
Gabriela Figueiredo Dias reappointed as Chair of IESBA
The International Ethics Standards Board for Accountants (IESBA) announced on Wednesday 20 November the reappointment of Gabriela Figueiredo Dias as its Chair, beginning 1 January 2025 until 31 December 2026. Ms Figueiredo Dias has been at the head of the global ethics board since January 2022. During her first term, she widened the impact of the IESBA’s International Code of Ethics on innovative matters. Among other things, she led the IESBA work on the development on new standards, including the soon-to-be-released Sustainability-related standards as well as standards addressing the ethical dimensions of tax planning and related services, the transformative effects of technology on the accounting, assurance and finance functions, and auditor independence for group audits. Before joining the IESBA, Ms Figueiredo Dias served as Chair of the Portuguese Securities Market Commission (CMVM) and was a Board member of the International Organization of Securities Commissions (IOSCO) and the European Securities and Markets Authority (ESMA). She also served as Vice-Chair of the Organization for Economic Cooperation and Development (OECD) Corporate Governance Committee.
