Interparliamentary Conference on SECG Seeks Ways to Combat Tax Evasion
Austrian Parliament, 18 September 2018
EU Commissioner Moscovici and Austrian State Secretary Fuchs Call for Joint Solutions to the Digital Economy and Corporate Taxation
Vienna (PK) – The issue of tax evasion was at the top of the agenda on the second day of the Interparliamentary Conference on SECG at the Austria Center Vienna, where parliamentarians from EU Member States discussed issues of stability, economic coordination and governance in the European Union. In their introductory remarks, Pierre Moscovici, European Commissioner for Economic and Financial Affairs, Taxation and Customs, and Austrian State Secretary Hubert Fuchs both advocated tax policy fairness and identified in particular the need for action on digital economy taxation and the introduction of a common corporate tax model. As deputy chair of the conference, Hans Michelbach, stressed that Europe had to join forces and tackle the problem of tax evasion together.
Commissioner Moscovici calls for fair and just taxation systems
Pierre Moscovici began his remarks by stating, “Our common goal is tax policy fairness.” Each and every taxpayer must pay the correct amount of tax at the right place, the right place being where value-added is created and profits are generated, he clarified. A great deal has already been achieved in close cooperation with European Parliament and with the individual Member States. For example, a framework for tax transparency with an eye toward the comprehensive exchange of tax data has been introduced. Moreover, as the EU Commissioner pointed out, there are several directives explicitly aimed at preventing tax avoidance as well as forms of aggressive tax planning. Mr. Moscovici also placed great importance on the blacklist of non-cooperative countries that fail to uphold to their commitment to improving taxation systems.
Concerning the EU’s further plans, Mr. Moscovici cited the fundamental reform of the value-added tax system to help prevent so-called carousel fraud. The EU is also planning to reform its corporate tax system in order to ensure that profits from multinational companies come under a uniform system. The EU Commissioner also identified a need for action in particular on digital taxation, where the introduction of a strategy to create digital business establishments was being discussed. It is not right for companies to avoid paying taxes on their profits, he stated, announcing a proposal for transitioning to a qualified majority in votes on taxation matters. He also called on all of the parliamentarians in attendance to exercise their influence to help the European Union’s proposals achieve a breakthrough.
Fuchs: Profits must be taxed where they are generated
Austrian State Secretary Herbert Fuchs also advocated fair and efficient taxation and agreed with Mr. Moscovici that large companies should pay taxes on their profits where they were generated, and not where the tax rates were the lowest. The State Secretary pointed out that Austria alone loses around € 1 billion a year due to tax fraud and tax evasion and called for a level playing field for everybody. Key initial steps have already been taken, he said, citing the automatic exchange of financial data, country-by-country reporting and the non-deductibility of interest and licensing fees, as well as the Register for Ultimate Beneficial Owners.
Mr. Fuchs also sees a need for action primarily in the digital economy, where he believes that joint European, and global, solutions must be found, for example by introducing the concept of digital business premises. The Common Consolidated Corporate Tax Base is also an important component, as it would make it easier to combat unfair tax competition, said Mr. Fuchs. State Secretary Fuchs also said he expected the blacklist of non-cooperative countries not only to result in a dialogue with third countries, but also to have a stronger deterrent effect on those states not in compliance with the rules.
Michelbach: Europe must tackle the issue of tax evasion together
Hans Michelbach welcomed the fact that the Austrian EU Presidency has declared the issue of tax evasion a priority, but also made the pointed remark that a number of EU Member States had made a name for themselves with their special “welcoming culture” for tax evasion and profit shifting. For the deputy chair of the conference, it is clear that everyone must contribute their fair share to financing the European Union. Tax evasion is an attempt to undermine EU cohesion and moreover it results in a distortion of competition to the detriment of medium-size enterprises and smaller, local companies. Europe must tackle this problem together, he stressed, issuing an urgent call in particular for regulations on taxing large Internet companies. He also called for a common corporate tax base and proposed an evaluation of the measures taken to date to prevent tax evasion.
Parliamentarians in favour of harmonised taxation systems as well
In subsequent debate there was agreement on the urgent need for solutions to digital taxation and the harmonisation of corporate taxation. Important matters for the parliamentarians also included combating tax havens as well as accelerating the pace of the financial transaction tax. A great deal of importance was also placed on the exchange of tax data, country by country reports and the list of non-cooperative countries. All in all, closing tax loopholes and harmonising European tax systems shaped the central tenor of the discussion. (Continuation Interparliamentary Conference on SECG)
PLEASE NOTE: Photos of the conference can be found at the website of the Austrian Parliament at https://www.parlament.gv.at/ENGL/PERK/PE/EU2018/WIPOCONF/.
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