EU Tax Policy Priorities for Q4
The European Commission’s work program for 2022 states that the EU will focus its tax policy priorities on the implementation of the global tax treaty on Pillars 1 and 2. The work program states that “The European Commission will now strive to demonstrate EU leadership in global tax equity. ensuring fast and consistent implementation across the EU ”. Subject to the agreed decision, the EU’s implementation of the OECD Global Agreement on Component 1 on the redistribution of tax rights could become a legislative clause (directive) in accordance with Article 115 TFEU, which requires a consensus of all member states.
As for the work priorities for the last quarter of 2021, it can be noted that two draft directives are under development, the publication date of which is set for December 22, 2021:
- Anti-Shell Company Directive.
- Proposal for the Implementation of the OECD Global Agreement on Effective Minimum Taxation (Component 2).
Alternatively, the Commission’s work program states that a non-legislative proposal will be received no later than the third quarter of 2022 in the form of a Minimum Income Recommendation.
This EU proposal will be complemented by a Directive on the disclosure of effective minimum tax rates for entities subject to the Directive implementing Pillar 2 in the European Union. It is not yet clear what the legal basis for such a proposal would be, given that tax disclosures previously created tensions between the Commission and Council (Member States) regarding the draft directive on public country-by-country reporting.
With regard to the initiative to combat the use of dummy legal entities, the EU intends to allow member states to tax such legal entities if they do business in another EU member state. For implementation, certain conditions must be met, as if the shell were within their own tax jurisdiction. It is expected that the criteria for defining a company as a “front man” will be based on a methodology similar to that already used by the EU in the DAC6 criteria.
Global Forum 2021 Annual Report and Plenary Session
The Platform for Tax Cooperation, a joint project of the IMF, OECD, UN and World Bank, has published its 2021 report that analyzes the Platform’s activities over the past year in five main areas, including: Medium-Term Income Strategies, COVID-19. taxation and sustainable development goals, international taxation and coordination.
The report shows that the Platform increased its support to countries during the COVID-19 pandemic in the areas of domestic resource mobilization, joint information products, technical assistance on tax response to the crisis, and seminars on critical issues. The platform has also published two sets of transfer pricing documentation and tax treaty negotiation toolkits, and has held a series of workshops and virtual consultations on these tools. The platform also hosted a series of seminars on tax reform in collaboration with the African Forum of Tax Administration and the Asian Development Bank.
As part of its future activities, the Platform aims to identify new priorities in which its cooperation can be of greatest value, to conduct further events dedicated to the relationship between taxes and sustainable development goals. Platforms and increased interaction with partners. countries regarding the instruments available.
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