Interplay of EU and international tax policy under the spotlight

MEPs on Thursday heard from experts about the state of play and the future of European and international tax policy.

The meeting, organised by the EP’s Subcommittee on tax matters, heard Benjamin Angel of the European Commission, and Sanya Gbonjubola and Liselott Kana, Co-Chairs of the UN Committee of Experts on International Cooperation in Tax Matters.

Opening the session, the Chair of the subcommittee, Pasquale Tridico said, “What role will the UN play? How will it cooperate with the OECD? What will be the role of the EU with regards to both fora? It is crucial to understand well how the work developed within the UN and the OECD will interplay, as well as how they will interact in the future.”

The invited experts gave an overview of where things stand, notably at the OECD and UN levels and laid out what their priorities were, going forward. They all stressed the need to reach agreements which could be supported by as many countries as possible rather than seeking impossible unanimities or pushing through agreements with simple majorities which would never be implemented. The 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. Mr Angel also pointed out that even in areas where agreement had already been reached, such as the minimum level of corporate taxation, it was important to make sure that countries did not put in place schemes which would return the tax revenue to the same companies who paid it.

MEPs raised concerns about the effects the change in administration in the US could have on the application of the OECD Pillar II agreement, and on future work on reaching an agreement on OECD Pillar I. 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 II. MEPs asked for more details regarding what the EU’s position on substantive issues would be during the negotiations on the UN framework convention on international tax cooperation, and what best practices existed for multi-lateral agreements on tax matters.

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 needed 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. Finally, MEPs also pointed out that tax justice seemed ominously absent from the new Commission’s priorities.