EU’s credibility damaged as tax reforms stall, officials say

Digital tax opposed by Ireland, Sweden and Denmark

The EU Commissioner for Economic and Financial Affairs, Taxation and Customs, Pierre Moscovici, formally unveiled a blueprint on Tuesday for a transition to qualified majority voting (QMV) on EU taxation policy matters.

The EU Commissioner for Economic and Financial Affairs, Taxation and Customs, Pierre Moscovici, formally unveiled a blueprint on Tuesday for a transition to qualified majority voting (QMV) on EU taxation policy matters.

 

Brussels’ frustrated efforts to overhaul company taxation is damaging the European Union as a whole, senior officials said on Wednesday, as the European Commission seeks to press ahead with a proposal to remove national vetoes on tax matters.

The EU Commissioner for Economic and Financial Affairs, Taxation and Customs, Pierre Moscovici, formally unveiled a blueprint on Tuesday for a transition to qualified majority voting on EU taxation policy matters.

Current unanimous voting procedures on EU tax policy have meant Commission proposals for a common consolidated corporate tax base (CCCTB) from as far back as 2001 and a 2011 financial transactions tax plan haven’t been passed by EU leaders.

Meanwhile, a Commission proposal last March for the introduction of a digital tax – levied at the rate of 3 per cent on EU-based digital sales of multinational companies – has been hit by opposition from Ireland, Sweden and Denmark. France and Germany were the main proponents of the measure.

While Ireland, on Tuesday became the first EU member to reject plans for a phased introduction of qualified majority voting on tax matters, EU officials said on Wednesday that citizens of the most reluctant states are strongly supportive of tackling tax avoidance.

Fraud

Almost 75 per cent of Irish citizens would like the EU to intervene more in the fight against tax fraud, according to a Eurobarometer public opinion survey carried out on behalf of the Commission in 2016.

The EU’s difficulty in adapting the tax system to the needs of the modern economy is damaging the union’s credibility internationally, the officials said.

The new Commission proposal envisages member states moving “swiftly” to developing QMV decision making when it comes to measures that improve cooperation in fighting tax fraud and evasion, as well as issues in which taxation supports other policy goals, including fighting climate change and improving public health.

The Commission then envisages the introduction by the end of 2025 of qualified majority voting for voting on major tax projects, such as the common consolidated corporate tax base (CCCTB) and new system for the taxation of the digital economy, which it says “are urgently needed to ensure fair and competitive taxation in the EU”.

Irish accountancy bodies and Chambers Ireland came out against the new plan on Tuesday, saying it will dilute and hinder sovereignty on taxation matters and act against the State’s competitiveness.