27/04/21

INTERNATIONAL TAX: EU delays corporate tax strategy review as it awaits global deal.

As published on independent.ie, Tuesday 27th April, 2021.

The EU has delayed a strategy paper on corporate taxes as a global deal on a minimum rate hangs in the balance.

The news comes as MEPs are set to call on the Commission to consider removing national vetoes on tax laws and bring in an EU-wide tax on big tech by June.

The white paper, which had been pencilled in for today, was intended to “take stock” of a stalled multinational tax plan known as the common consolidated corporate tax base (CCCTB).

The European Commission wants to set out “a holistic and ambitious vision” for corporate taxation in the paper.

But it was put on hold after US President Joe Biden revealed his own plans to onshore multinational taxes and press for a “strong minimum tax” at global level in talks led by the Organisation for Economic Cooperation and Development (OECD).

A public consultation on the European Commission’s future tax plans closed earlier this month, with the white paper now likely to follow next month.

Meanwhile, on Wednesday, MEPs are set to ask the Commission “to explore all possibilities offered by the treaties” when tabling new tax laws.

The wording is code for using Article 116 of the EU treaty, which allows for majority voting on tax laws that affect the single market.

The call was supported by a large majority – 48 votes to four – of MEPs in the European Parliament’s economic affairs committee last month.

Fianna Fáil MEP Billy Kelleher said at the time that the move would be “skirting with the treaty itself”.

EU tax chief Paolo Gentiloni signalled last year that he would consider using the controversial article as a basis for future tax proposals.

The MEPs’ resolution will also call on the EU to table its own digital levy by June, a move that many fear could scupper US support for a global deal during the OECD talks.

Separately, the Financial Times is reporting that Brussels is pushing countries such as Ireland to eliminate sweetheart corporate tax deals to access EU recovery money.

Ireland has been allocated around €900m in grants and loans from the €750bn Recovery and Resilience Fund, but the money comes with strings attached.

The European Commission has asked countries to send in their spending plans for the cash by the end of this month.