On 15 July 2020, the EU Commission adopted a tax package with the aim of improving cooperation between tax authorities, to reduce red tape and to reform the code of conduct concerning business taxation. The Chamber of Labour welcomes the package as an important step in the right direction; however, it demands the implementation of additional measures.
According to the report of the European Parliament’s sub-committee on tax matters, the EU is losing 825 billion euros p. a. due to tax evasion. The problems regarding the intergovernmental tax competition of EU countries and aggressive tax avoidance strategies by multinationals are well known: hence, in view of the economic challenges posed by the Coronavirus crisis, an ambitious, fiscal policy course is now more acute than ever.
The AK regards the 25 proposed measures of the Action Plan as both sensible and necessary; however, it is unlikely that they will result in many substantial improvements. The AK welcomes the provided for expansion of automatic information exchange on online platforms through a Directive amendment included in the tax package, that ought to provide more transparency and tax justice. In Austria, such a regulation was already implemented in 2018. Now, this measure requires a speedy Europe-wide implementation.
Fighting VAT fraud
In view of the annual tax loss of 50 billion euros due to VAT fraud, a permanent change to the so-called reverse charge procedure, which goes beyond the current plan of the tax package, would be desirable: In this case, the VAT liability is transferred from the seller to the easier locatable buyer. The amalgamation of turnover tax duty and pre-tax deduction makes carousel fraud technically impossible. A 2018 Council Decision already provides for the introduction of reverse charge procedures under certain circumstances, until 2022. However, in view of the high changeover expense and the rather short period, this is not practical for Member States – hence, a long-term solution would be advisable.
AK demands: EU-wide minimum tax rate for corporations
In addition to the changes of the code of conduct concerning business taxation, enshrined in the package, the implementation of a minimum tax rate for company profits is urgently required. This should, together with a Common Consolidated Corporate Tax Base (CCCTB), be the core of the Action Plan on Business taxation, which has been announced for the end of the year. Apart from that, a common, globally implemented and effective minimum tax rate could increase global annual corporation tax revenue by up to 4 %; hence, by up to 100 billion USD p.a. The EU-wide minimum tax rate shall tie in with the currently still ongoing negotiations on a minimum tax rate and a digital tax at OECD level. In order to increase the pressure of early decision-making at OECD level, AK and ÖGB initiated the Social Media campaign “Make Multinationals Pay”.