A summary of the Committee’s exchange of views, with a focus on digital policy, is now available.
EP ECON Committee – 27 March 2018
Structured dialogue with Pierre Moscovici, Commissioner for Economic and Financial Affairs, Taxation and Customs
– Exchange of views on taxation issues
Commissioner Moscovici made the following opening remarks:
- he believed that it was necessary for the Parliament to continue to exert its pressure to ensure that all the necessary reforms were carried out to end tax abuse;
- he stated that he understood that Member States (MS) wanted to maintain their tax sovereignty as a matter of principle, but stressed that the EU needed to work together;
- good work had been done over the past 4 years on tax avoidance and evasion;
- setting up a definitive VAT regime that worked for the EU was one of his priorities;
- regarding digital taxation, he had proposed to revise corporate tax rules to take into account new activities;
- the provision of digital presence had been introduced;
- he had also proposed a temporary tax until corporate taxation had been fully reviewed;
- he wanted to avoid the fragmentation of taxation at the European level;
- he stressed that the digital tax rules took into account the fact that the participation of users was central in creating value. He mentioned Facebook, Google, Airbnb and Uber as examples;
- the tax should raise 5 billion EUR in the first year.
Alain Lamassoure (EPP, FR)
- the Commissioner had made it clear that the long term solution was taxing digital activities the same way that other activities were taxed, and the Committee’s recommendations had been taken on board.
Jeppe Kofod (S&D, DK)
- he stated that the TAX3 Committee was looking forward to working with the Commissioner on taxation rules within the EU and globally;
- he raised the issue of non-cooperative tax jurisdictions. It was very important, and he asked what the Commission was doing to ensure full transparency.
- he believed that transparency was the main driver of change;
- regarding the list of non-cooperative tax jurisdictions, he stated that it was the list of the MS, not the Commission. He insisted on transparency in the framework of the Council;
- work on sanctions needed to be done. The Commission had adopted guidelines in the framework of its budget and financial institutions, and he believed that MS should do the same.
Pirkko Ruohonen-Lerner (ECR, FI)
- the plans on digital taxation had raised a lot of criticism;
- ‘digital presence’ meant that value would be increasingly be dictated by the market. For example, Finnish businesses did a lot of R&D work in Finland, but the markets and clients were outside of Finland;
- she had not found any positive arguments in favour of the Commissioner’s proposals;
- she asked how the Commissioner would be responding to the criticisms raised by Finnish businesses.
- he stated that the Commission was working on tax issues within the international framework. They were global solutions to global problems, and he was working closely with the OECD, and the Commission was also very active in the work done by the G20;
- nevertheless, the EU had its own special characteristics. He considered that a fragmented approach in the EU would be destructive;
- the impact on every sector and MS would have to be assessed. Work was being done to consolidate the CCTB, but he stated that it was important to listen to the views expressed at national level.
Lieve Wierinck (ALDE, BE)
- regarding the interim tax, she asked whether the Commissioner thought it would be challenged under the presumption that it targeted specific companies;
- she wanted to know how it would be avoided that the tax was being passed on to the consumer, and how double taxation would be avoided;
- she raised the issue of ‘digital presence’ and how that would be defined;
- user data would be necessary in the corporate tax revision. User location data would be needed to determine where the value was created. She asked if it would be possible to gain this information from every user in line with the data protection legislation such as the GDPR;
- she asked how the scope and the thresholds been determined, and how it would be ensured that MS were not disadvantaged.
- he stated that the proposals were not attached to any trade strategy. They were not retaliatory. Companies simply needed to pay their share of tax;
- regarding the digital presence and digital markets, he stated that certain criteria needed to be used such as the number of clicks and users;
- companies themselves compiled data, and it was up to them to be transparent and declare their data;
- the Commission believed that the ceiling needed to be sensible one which would allow the companies to act correctly.
Marie-Pierre Vieu (GUE/NGL, FR)
- she asked how the Commission would ensure that the big companies were not simply handing over the tax to the consumers and suppliers;
- regarding the long-term taxation, she stated that international tax rules needed to be reconsidered to take into developing countries.
- he stated that the CCTB had to be the “mother of all reforms”;
- a reasonable tax rate of 3% had been chosen to ensure that it did not become a problem in the future. He stressed that it was not discriminatory and did not target specific companies;
- he mentioned the cost of Brexit;
- unanimity in the Council was necessary, but he believed that the MS which were currently hesitant could be convinced.
Mario Borghezio (ENF, IT)
- he raised the issue of cryptocurrencies, and stated that the Commission had been very timid in addressing it.
- cryptocurrencies and their regulation had been discussed in the G20, and it was also being considered in the OECD.
Luděk Niedermayer (EPP, CZ)
- regarding digital taxation, he asked how the Commission would ensure that big companies would cooperate in handing over the necessary data for the short-term tax.
- he stated that the best way to tax big companies was through the profits and not turnover;
- regarding data, he stated that it would be a declarative tax. Companies would need to hand over their data. The companies he had met stated that they would comply with the rules.
Brian Hayes (EPP, IE)
- half of the companies affected by the interim digital tax would be US companies. He asked whether the Commission was worried about a tit-for-tat reaction from the US Administration;
- he asked whether it was a possibility to fast-track the OECD response to digital taxation;
- he questioned whether the Commissioner had considered sunsetting the interim digital tax until the OECD had made its decision.
- regarding the OECD, he stated that he appreciated its work and its report on digital taxation showed that it was a problem that needed to be addressed internationally. It also showed that there was no consensus;
- some MS felt the need to legislate by themselves and he wanted to avoid the patchwork approach to legislation as it would destroy the internal market;
- he believed the EU needed to act decisively on its own;
- he stressed that the interim tax was meant to be interim. It was waiting for the CCTB, a legal definition of ‘digital presence’ and the OECD;
- he stated that he had been in contact with the US authorities. He stressed to the US that it was not an anti-US tax. He would be meeting with US officials to ensure to “water down too much excitement from the US”.
Paul Tang (S&D, NL)
- when the Commissioner had presented the digital tax package, he had referred to the tech giants paying 9.5% as the average tax burden;
- according to the Commission, Apple had paid 0.05%. He asked if the Commission would be publishing more concrete figures on what the tech giants paid or did not pay;
- he asked if the Commission would be willing to share which national tax administrations were not cooperating;
- he asked why the Commissioner had not invoked Article 116 in the digital tax package.
- he stated that the figures he had given were simply averages. Commissioner Vestager was doing the complimentary work on taxation;
- he would be prepared to come to the Parliament to discuss figures when they were ready;
- the Commission was prepared to work with the Parliament and national parliaments. That was “indispensable”.
Source: One Policy Place