Debate: Fair and simple taxation supporting the recovery strategy
Date: WEDNESDAY, 9 MARCH 2022
Speaker: Paolo Gentiloni
Language: EN

And so I would first like to thank for the extensive and very useful recommendations you are providing in this report and assure you that the Commission entirely supports the objectives expressed in the report. A key priority for us is, of course, in the area of business taxation, the implementation of the two pillars of the OECD tax deal. But the OECD reform is only one piece of the puzzle and of the importance of taxation policy in this very moment when we need our economic strength and resources to respond to the crisis. As you rightly point out, there is much more that can be done to improve fairness and further simplify our tax system, in particular for SMEs. Let me start with simplification. We want to simplify compliance and help in the fight against VAT fraud. This is why the Commission is preparing its VAT in the Digital Age initiative for the second part of this year. This proposal will seek to modernise VAT reporting requirements, including facilitating invoicing, it will improve and modernise the VAT rules for platforms and will broaden the scope of the VAT One—Stop Shop to include the remaining business—to—consumer transaction. Hence we will limit the cases to the minimum when businesses would need multiple VAT registration in different Member States and it will allow a single VAT registration number in the EU. At the same time, we need to ensure tax fairness where everyone has to pay their fair share, and this leads to the much—needed reduction of the tax gap and compliance costs and your requests for an enhanced Euro-FISC 2.0.  As you know, VAT fraud continued to deprive Member States from much—needed revenues. EU countries lost EUR 134 billion in VAT revenues in 2019. And we have to do everything we can to support Member States. It’s their competence, of course, but we have to do everything we can to support them, including through electronic systems, to identify cross—border fraud and reduce the VAT gap. And we will do this also in coordination with other initiatives of the Commission, namely the one addressing the use of shell companies. Also with respect to your suggested new coordinated European corporate income tax system, the Commission confirms our intention to propose an initiative to address the debt—equity bias, DEBRA. A robust anti—abuse framework will be part of this initiative to avoid aggressive tax planning possibilities. In what concerns the need for more certainty for taxpayers and/or Member States’ tax administrations, the existing Council Directive on a tax dispute resolution mechanism provides for an effective framework. The review of the application of the provisions of this directive after a period of 5 years – so in 2024 – will be the occasion to identify remaining gaps in the directive as recommended in your report. The Commission has been discussing also the extent of the issues relating to tax residency and is also working on the DAC 8 initiative as an amendment to the Directive on Information Exchange, also involving crypto-assets and e—money. So, much work is ongoing and I am pleased, honourable rapporteur, that the Commission and the European Parliament are supporting the same objective. Together, we still have a long way to go and will have to cross new obstacles and challenges along the path, but we will support each other in this path.