The European Commission is preparing to present a potentially controversial proposal that would roll back the tax-levying powers of the EU’s individual national governments, a move that is meant to close a loophole for administrations that offer “investment-friendly” regimes to companies from outside the European Union.
Ireland, Luxembourg, and Malta have all come under intense scrutiny by the European Commission’s Competition Department as their selective tax regimes have benefited major retail and tech giants including Nike, Amazon, Apple, and McDonald’s.
The European executive has opened investigations into the favourable terms that several large companies received in certain countries, some of which have led to the partial recovery of the amount that the individual corporations should have paid in taxes under EU law.
The Commission is planning to propose extending majority voting to all EU tax policies by the end of 2020, which would curb the power of a national government to veto a tax ruling by Brussels.
According to the EU executive, the current veto powers that each government wields when it comes to taxation has resulted in a tax policy that fails to deliver on its full potential. This has prompted Brussels to take a significant step in terms of exercising its authority by planning to issue a directive that would force each European Union member to reconsider their tightly-guarded traditional views on national sovereignty.
The Commission’s proposal says that the current system of tax competition has done little to halt the practice of some of the bloc’s members to under tax of cross-border industries while overtaxing less mobile areas such as labour income and consumption, leaving most of the financial burden to fall “on workers, consumers and domestic businesses”.
The new proposal would, by the end of this year, see qualified majority voting extending to areas where examples of tax abuses have been widespread. Certain tax measures would later be introduced to further specific policy goals in areas such healthcare, climate change, and environmental protections, as well as areas that are already harmonised under EU law, inclduing VAT and excise duties.
via New Europe
