During the next meeting of the European Parliament’s Special Committee on Tax Rulings and Other Measures Similar in Nature or Effect (TAXE 2) which will take place on May 24, 2015, co-rapporteurs Jeppe Kofod and Michael Theurer will present their Draft report on tax rulings and other measures similar in nature or effect. It however looks like the report is already available for those who are interested.
Regular visitor of the website of TAXE 2 might already have noticed that in the sub-section “Draft report” from the section “Documents” a link is available to a downloadable Pdf file titled: “DRAFT REPORT on tax rulings and other measures similar in nature or effect” dated May 11, 2016 and drafted by Co-rapporteurs: Jeppe Kofod and Michael Theurer.
The document is 21 pages long and contains:
· Motion for a European Parliament Resolution
· Annex 1: List of persons met (Committee meetings, Coordinators and Missions)
· Annex 2: Multinational Corporations and Banks Invited to Appear in Committee Meetings
The motion for a European Parliament Resolution includes a.o.:
· Overall considerations and establishment of facts
o Role of specific tax jurisdictions
o Role of financial institutions in aggressive tax planning by multinational enterprises (MNEs)
o Patent, knowledge and R&D boxes
o Code of Conduct Group documents
o The external dimension: the G20, the OECD and the UN; involvement and consequences for developing countries
o The work of Parliament’s Special Committee (TAXE 2)
· Conclusions and recommendations
o Follow-up by the Commission
o Blacklist and concrete sanctions for uncooperative jurisdictions and withholding tax
o Patent, knowledge and R&D boxes
o Banks, tax advisers and intermediaries
o Whistleblowers
o Code of Conduct Group and interinstitutional issues
o External dimension
o Other recommendations
The conclusions and/or recommendations dations made in the Draft report include a.o.:
· Urges the Commission to come forward with a proposal for a common corporate consolidated tax base (CCCTB) which would provide a comprehensive solution to harmful tax practices within the Union; believes that the consolidation of the CCCTB is essential and is becoming increasingly urgent; calls on the Member States to promptly reach an agreement on this and to swiftly implement it;
· Insists that concrete legislative action needs to be taken on transfer pricing, since 70 % of profit shifting is done through transfer pricing;
· Calls on the Commission to come up as soon as possible with a common Union list of uncooperative jurisdictions (i.e. a ‘blacklist of tax havens’), based on sound and objective criteria, including full implementation of OECD recommendations, BEPSactions and Automatic Exchange of Information standards, and welcomes the Commission’s intention to reach an agreement on such a list within the next six months; calls on the Member States to endorse that agreement by the end of 2016;
· Calls for a concrete Union regulatory framework for sanctions against the blacklisted non-cooperative jurisdictions, including, but not limited to, the possibility of reviewing and, in the last resort, suspending free trade agreements and prohibiting access to Union funds; calls for the sanctions also to apply to companies, banks, and accountancy and law firms, and to tax advisers proven to be involved with those jurisdictions;
· Calls on the Member States to renegotiate their bilateral tax treaties with third countries in order to introduce anti-abuse clauses and thus prevent ‘treaty shopping’; stresses furthermore that this process would be expedited considerably if the Commission were mandated by Member States to negotiate such tax treaties on behalf of the Union;
· Recommends introducing an EU-wide withholding tax, in order to ensure that profits generated within the Union are taxed at least once before leaving it; notes that such a proposal should include a refund system to prevent double taxation;
· Calls on the Commission to put forward proposals for binding Union legislation on patent boxes that goes beyond the OECD Modified Nexus Approach, so as to prohibit the misuse of patent boxes and to ensure that if and when used they are linked to genuine economic activity;
· Calls on the Commission to come forward with a Union Code of Conduct for all advisory services, including a Union incompatibility regime for tax advisers, in order to prevent them from advising both public and private sectors and to prevent other conflicts of interest;
· Stresses the importance of clear separation between tax advising services and auditing services within accountancy firms; asks the Commission to study the possibility of revising the Accounting Directive and Regulation to this effect;
· Stresses the need for concrete sanctions, including the possibility of revoking business licences for professionals and companies proved to be involved in designing, advising on the use of, or utilising aggressive tax planning and evasion schemes; requests that the Commission explore the feasibility of introducing proportional financial liability for tax advisers engaged in unlawful tax practices;
· Calls on the Commission to analyse the possibility of introducing proportional financial liability for banks and financial institutions facilitating transfers to known tax havens, as defined by the future common Union list of tax havens and uncooperative tax jurisdictions;
NB: Please note that the report contains much more conclusions and recommendations than the once mentioned above.
Click here to be forwarded to the “DRAFT REPORT on tax rulings and other measures similar in nature or effect (2016/2038(INI))” dated May 11, 2016 as available on the website of the European Parliament.
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