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The business environment has been changing radically over the last few decades – and especially over the last year.
The pandemic accelerated some major trends that were already re-shaping our economies and societies.
More and more Europeans are working, interacting and doing business online.
All this means that we have to rethink our approach to business taxation, while keeping it fair and efficient.
At present, companies doing business in the EU need to cope with up to 27 different tax systems. This is time-consuming and costly, especially for smaller businesses.
In the longer term, it means we need to do a thorough consideration of the overall tax mix: the division between different types of taxation in areas such as labour, capital and consumption.
Fighting climate change, for example, will require changes in people's behaviour, and so taxation in areas such as the environment will become increasingly important.
Today's strategy on business taxation for the 21st century addresses both the immediate and longer-term challenges facing the business tax system in the EU.
For the short term:
We will take action to ensure effective taxation by raising public transparency on taxes paid by large economic players and by tackling the misuse of shell companies for tax purposes.
We will also promote investment and innovation by addressing the debt-equity bias in corporate taxation by introducing a proposal of DEBRA - or Debt Equity Bias Reduction Allowance.
This should make companies with a stronger capital base less vulnerable to shocks.
It also supports the Capital Markets Union, which aims to give businesses access to alternative, more diverse sources of funding to make Europe's financial system more stable.
For the longer term, the Commission will propose a holistic EU business tax framework fit for the next decades with the BEFIT initiative (“Business in Europe: Framework for Income Taxation”).
It will:
The College has also agreed a recommendation on the domestic treatment of losses as a way to give extra support to businesses hit by the pandemic.
It encourages Member States to allow companies to offset, or carry-back, losses made due to the pandemic in 2020 and 2021 against the taxes paid on profits before 2020.
Our ambitious agenda to reform corporate taxation in the EU is complementary to the ongoing global discussions in the OECD.
A global solution would still be the best way to provide a stable and predictable taxation framework for businesses worldwide.
With the latest announcements from the United States, we are closer to achieving a historic global agreement on reforming international corporate taxation. Once an agreement is found, the Commission will move quickly to put it into practice in the EU.
At the same time, Europe in any case needs a new, modern and fair tax framework built on clear and unambiguous rules.
It should support both businesses and Member States.
Our strategy is part of our comprehensive and ambitious EU tax agenda to make taxation fairer, greener and fit for a modern economy.
It also makes a significant contribution to creating a more resilient single market, and a stronger Europe in the world.