The European Commission has published a new plan for corporate tax reform
The main points of the Commission’s proposal are set out as follows:
- The general set of rules for improving the business environment in the Single Market Business in Europe: Income Taxation System (or BEFIT), designed to reduce bureaucracy, reduce compliance costs and minimize tax evasion.
- Providing more public transparency: requiring certain large companies to publish their effective tax rates.
- Supporting member states’ businesses in recovering from COVID-19, recommending that companies be allowed to offset their losses in 2020 and 2021 with taxes they paid until 2020.
- Countering the misuse of front companies: monitoring and reporting requirements for front companies so that tax authorities can better respond to aggressive tax planning.
- Eliminate debt-to-equity bias in corporate taxation. Encouraging companies to seek financing from capital rather than borrowed funds: proposal from DEBRA.
A key element of the EU’s long-term tax policy strategy is a 2023 proposal called Business in Europe: Income Tax System (BEFIT). The Communiqué of the European Commission states that BEFIT will create a single pan-European tax return for MNEs, which will greatly simplify the administration for companies doing business in the single market.
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