MEPs called for a reset of outdated international tax rules, including the setting of a minimum effective corporate tax rate and that the EU should go it alone if global negotiations fail.
The
calls come in the form of a resolution adopted by MEPs of the economic
and monetary affairs committee on Tuesday by 48 votes in favour, 4
against and 6 abstentions. Reacting after the vote its rapporteurs said:
Andreas Schwab (EPP, DE)
“We have asked the US to accept that a
common system is needed, where no "safe harbour" rules apply. We need to
fight together for a solution at the G20/OECD level.
If a global solution is not possible,
the EU should make a move now. It's time for the legislator to shape a
clear and complete digital tax policy in the EU: minimum taxation across
the EU, no market distortions due to national toolboxes, and tax
certainty for digital companies that will benefit from harmonised and
fair digital taxation.”
Martin Hlaváček (Renew, CZ)
“We want to ensure for our citizens that
digital companies making large business in Europe pay their fair share
of contributions to our public finances, regardless of their physical
presence. In absence of an OECD agreement with our external partners by
July 2021, the European Parliament will make sure that the Commission
presents our own European solution without any delays.”
Archaic rules not fit for the digital age
MEPs note that the current international
tax rules date back to the early 20th century, with the emphasis on
physical presence and next to no factoring in of digitalisation of
business. The result is that taxes paid in one jurisdiction no longer
reflect the value and profit created there, leading to Base Erosion and
Profit Shifting, the resolution says. The rules have also led to
traditional companies being taxed on average nearly 3 times as much as
digital businesses.
Main proposals
To remedy the existing discrepancies and increase fairness, MEPs make a number of suggestions.
They call for a minimum effective tax
rate to be set at a fair and sufficient level to discourage profit
shifting and prevent damaging tax competition.
They also call for a reallocation of
taxing rights to reflect that the interaction with users and consumers
by businesses as a result of digitalisation significantly contributes to
value creation in highly digitalized business models.
Finally, MEPs insist that the EU should
develop its own fall-back position which would kick-in if global
negotiations do not yield results by the end of the year. As a first
step this fall-back position would include a digital services tax.
Next steps
The resolution will now be tabled for a plenary vote, expected at the end of April.
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