CFE’s Tax Top 5 – 14 April 2025

The 17th Plenary Meeting of the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting (BEPS) was convened last week in Cape Town, South Africa, from 7 to 10 April 2025. The event marked a significant milestone—the tenth anniversary of the BEPS Package—and welcomed 449 delegates representing 135 countries and jurisdictions, alongside 11 international organisations. The high-level discussions centred on implementation progress, particularly the Two-Pillar Solution designed to address tax challenges arising from the digitalisation of the global economy.

Key outcomes from the meeting included a collective reaffirmation of the need to enhance certainty and stability within the international tax system. Participants emphasised the critical importance of advancing the implementation of Pillar Two and continuing negotiations on Pillar One. The Inclusive Framework was recognised not only as a vital collaborative platform but also as a springboard for exploring emerging areas such as global mobility, and the interplay between tax policy, inequality, and economic growth.

Delegates also contributed to shaping a stocktake report on BEPS progress, which will be presented to the G20 later this year. The meeting fostered a forward-looking dialogue by incorporating perspectives from stakeholders including business, academia, civil society, and international institutions. Notably, the Platform for Collaboration on Tax—comprising the IMF, OECD, UN, and World Bank—offered insights into domestic resource mobilisation strategies to support sustainable growth, especially from the standpoint of developing nations.

In their concluding statement, the Co-Chairs and OECD officials highlighted the shared commitment of members to extend and evolve the work of the Inclusive Framework. Looking ahead, the platform aims to pursue a phased, evidence-based approach to both ongoing and emerging international tax challenges, reinforcing its role in fostering transparency, cooperation, and inclusive global tax governance.

EU Readies Defences & Considering DST on Big Tech to Respond to Escalating Transatlantic Trade Tariff Measures 

On 9 April 2025, the European Commission approved a first package of countermeasures related to the US tariffs and noted it was preparing additional responsive actions, especially in support of the steel, automotive, and pharmaceutical sectors.

European Commission President Ursula von der Leyen has also stated that the EU is prepared to impose taxes on U.S. tech giants like Google and Meta if ongoing trade negotiations with President Donald Trump do not yield a balanced agreement. This potential measure would target digital advertising revenues and is considered a response to Trump’s recent imposition of a 20% tariff on EU products, despite a 90-day suspension on additional tariffs to facilitate talks. Von der Leyen emphasised that while the EU seeks a fair deal, it is ready to extend the trade dispute into the digital services sector if necessary.

The EU’s stance reflects a broader commitment to maintaining its digital regulations, such as the Digital Markets Act and Digital Services Act, which aim to curb anti-competitive behaviour and ensure online safety. Despite U.S. criticisms that these rules disproportionately affect American tech companies, EU officials, including Vice-President Henna Virkkunen, have stated that the bloc will not compromise its digital policies for a trade deal. The EU is also considering invoking its Anti-Coercion Instrument, which would allow for more assertive responses to perceived economic pressures.

On 10 April 2025, following President Trump’s announcement of a 90-day pause on the implementation of new global tariffs, the European Union suspended its planned retaliatory tariffs for the same duration, aiming to provide a window for negotiations. Despite this temporary reprieve, the EU emphasised its readiness to act decisively to protect its businesses and consumers should negotiations fail.

President Ursula von der Leyen previously strongly condemned the US action, calling the imposition of universal tariffs “a major blow to the world economy.” She warned of widespread consequences, including increased global uncertainty, supply chain disruptions, and a surge in inflationary pressure, particularly affecting vulnerable groups worldwide due to anticipated rises in the cost of food, medicine, and transportation.

The specific EU countermeasures announced on 9 April were in response to the Executive Order signed by President Donald J. Trump on 2 April titled “Regulating Imports with a Reciprocal Tariff to Rectify Trade Practices that Contribute to Large and Persistent Annual United States Goods Trade Deficits.” The order introduced a sweeping new tariff regime, including a universal 10% baseline tariff on all imports, effective 5 April 2025, along with elevated country-specific tariffs targeting approximately 60 nations based on their perceived trade imbalances and barriers.

Under the country-specific provisions, the European Union was to be subject to a 20% tariff—a significant escalation in transatlantic trade tensions. This followed on from a proclamation issued on 26 March 2025, in which the White House reimposed 25% tariffs on imports of automobiles and certain automobile parts from the EU and other trading partners under Section 232 of the Trade Expansion Act, citing national security concerns. These automotive tariffs were preceded by the United States’ March 2025 decision to impose renewed tariffs on EU steel and aluminium imports, further straining transatlantic relations.

Platform for Collaboration on Tax Releases 2024 Progress Report 

The Platform for Collaboration on Tax—a joint initiative of the IMF, OECD, UN, and World Bank—has published its 2024 Progress Report, outlining key developments in tax policy collaboration and capacity building. The report focuses on four core workstreams: tax and the Sustainable Development Goals (SDGs), international taxation, medium-term revenue strategy, and stakeholder engagement.

Major highlights in the report include the review of the 2015 PCT tax incentives toolkit, launched in response to evolving international tax rules such as the Global Anti-Base Erosion (GloBE) framework and the global minimum tax. A new Tax Incentives Principles Paper was published for consultation, supported by a technical seminar and expert subgroup.

In the SDGs workstream, the PCT emphasised the role of taxation in addressing the global development financing gap, which the UN estimates at USD 4 trillion annually. A blog released by the heads of the four partner organisations highlighted the importance of domestic revenue mobilisation for achieving SDGs, particularly in low-income countries. Environmental taxation remained a key theme, with webinars on border carbon adjustments (BCAs) and expanded resources on climate-related fiscal policy added to the PCT website.

On international taxation, the PCT continued its involvement in global initiatives, including the OECD/G20 Inclusive Framework and the UN Tax Committee. The report notes progress toward a UN Framework Convention on International Tax Cooperation and the development of a new e-learning course on tax treaty negotiations. Work also continued on updating guidance and supporting countries in responding to digitalisation and other international tax challenges.

The PCT also strengthened its outreach through technical events, publications, and regular updates to its Tax Project Database. With funding secured through 2028, the Platform plans to introduce a new monitoring and evaluation workstream and continue its role in advancing collaborative tax reform efforts.

EU Parliament to Examine Tax Simplification Measures to Boost Competitiveness 

On 24 April 2025, the European Parliament’s FISC Subcommittee will hold its first discussion on a new own-initiative draft report entitled “The Role of Simple Tax Rules and Tax Fragmentation in European Competitiveness.” The report, prepared by Rapporteur MEP Michalis Hadjipantela, outlines a range of policy considerations aimed at simplifying the EU tax framework, with a particular focus on reducing compliance burdens for small and medium-sized enterprises (SMEs).

The draft highlights the need for greater tax simplification, digitalisation, and cooperation among Member States. These measures are presented as means to lower administrative costs, support cross-border economic activity, and improve the overall efficiency of tax collection. The report aligns with the European Commission’s objective to reduce reporting obligations by 25%, and by at least 35% for SMEs. Digital tools, including artificial intelligence, are identified as key to modernising tax administration, reducing fragmentation, and enhancing transparency. The proposal calls for systematic impact assessments and competitiveness checks for new tax measures to ensure alignment with broader economic goals.

In addition to internal EU tax reform, the report addresses ongoing international developments, particularly around the OECD/G20’s Pillar 2 initiative. It notes the implications of recent U.S. policy changes and stresses the importance of providing legal clarity and certainty for businesses operating within the EU. The draft also examines barriers to cross-border activity, including double taxation and administrative complexity, and encourages further analysis of tax incentives to support research, development, and innovation.

The discussion on 24 April at the FISC meeting will bring together the Rapporteur and shadow rapporteurs to review the initial proposals and consider next steps.

EU Consultation on AI Strategy Invites Views on Public Sector Innovation

The European Commission has launched a new public consultation as part of its forthcoming Apply AI Strategy, expected in the third quarter of 2025. The strategy is set to form a cornerstone of the EU’s ambition to become a global leader in artificial intelligence, promoting both industrial uptake and improved delivery of public services.

The Commission’s vision is to foster AI adoption across Europe’s key industrial sectors and, crucially, in the public sector where productivity and service quality can be significantly improved. The strategy will build on existing initiatives, including the AI Act—the world’s first regulatory framework for artificial intelligence—and several coordinated EU policy plans. It also aims to address current shortcomings such as low AI adoption rates (only 13.5% of EU companies in 2024), reliance on foreign technologies, and limited collaboration between large firms and SMEs.

A variety of support mechanisms are expected to underpin the strategy, from AI factories and digital innovation hubs to skills academies and data spaces. The Commission is also keen to ensure the human-centric and ethical deployment of AI technologies, safeguarding fundamental rights while enhancing institutional performance. The Commission explicitly seeks feedback from public administration stakeholders and professional groups about how AI could reshape service delivery—including taxation. For tax professionals, the consultation represents a valuable opportunity to influence how AI technologies might be used to streamline administrative processes, enhance compliance monitoring, improve taxpayer services, and even support fairer and more transparent decision-making.

The consultation process will include this public call for evidence, structured sector-specific dialogues, and engagement with Member States. Input on the public consultation can be provided via the Commission’s Have Your Say platform until 4 June 2025.

The selection of the remitted material has been prepared by:
Aleksandar Ivanovski & Brodie McIntosh