21.05.2021. EU proposes “business-friendly” unified tax rulebook for companies

Company News

The European Union’s executive adopted a plan for a more unified corporate tax regime across the bloc, whose 27 national systems are struggling to cope in a world where cross-border business, often via the Internet, is commonplace.
Under its proposal, certain large companies operating in the EU would have to publish their effective tax rates to ensure greater transparency, and there would be new anti-tax avoidance measures to tackle the abusive use of shell companies.
Governments worldwide are desperate to raise extra revenue to rebuild their pandemic-ravaged economies, and corporate taxation has become an obvious target after decades of decline.
The Organisation for Economic Cooperation and Development (OECD) is to agree in June on global rules on where to tax large multinational corporations like Google, Amazon or Facebook, and at what effective minimum rate.
The OECD aims to stop governments cutting tax rates competitively to attract investment, and to create a way to tax profits in countries where the customers are, rather than where a company sets up its office for tax purposes.
The European Commission plans to use the OECD deal as a stepping stone to more unified rules for business taxation across the EU.
Its plan would also address the debt-equity bias in current corporate taxation, encouraging companies to finance their activities through equity rather than debt.
EuroCommerce, which represents Europe’s retail and wholesale sectors, welcomed the plan, saying different tax regimes are a major cost barrier across the EU’s single market.
The European Commission’s latest plan will now go to member states and EU lawmakers for approval. Its plans for EU corporate taxation rules have failed before, as setting tax rates is a jealously guarded prerogative of national parliaments.