On 17 October, Finance Ministers sitting at the Council of the European Union voted to approve changes to the EU List of Non-Cooperative Jurisdictions for Tax Purposes, adding Antigua and Barbuda, Belize and Seychelles, and removing British Virgin Islands, Costa Rica and Marshall Islands from the list. The following 16 jurisdictions remain on the list: American Samoa, Antigua and Barbuda, Anguilla, Bahamas, Belize, Fiji, Guam, Palau, Panama, Russia, Samoa, Seychelles, Trinidad and Tobago, Turks and Caicos Islands, US Virgin Islands and Vanuatu.
The EU Finance Minisers also adopted the DAC8 directive on administrative cooperation in the field of taxation. The directive strengthens the EU’s existing legislation in the field, by enlarging the scope for registration and reporting obligations and overall administrative cooperation of tax administrations.
The Directive sets out new reporting requirements related to the Crypto-Asset Reporting Framework (CARF) and amendments to the Common Reporting Standard (CRS). The G20 endorsed the CARF and the amendments to CRS, both of which it considers to be integral additions to the global standards for automatic exchange of information. The Directive also extends the scope of the current rules on exchange of tax-relevant information by including provisions on exchange of advance cross-border rulings concerning high-net-worth individuals, as well as provisions on automatic exchange of information on noncustodial dividends and similar revenues, in order to reduce the risks of tax evasion, tax avoidance and tax fraud, as the current provisions of DAC do not cover this type of income.
European Commission Adopts 2024 Work Programme
The European Commission has adopted its Commission Work Programme 2024, setting out priorities and legislative proposals that will form the focus of the upcoming year. The Programme has a focus on simplification and competitiveness for EU business, with emphasis being placed on measures to be introduced for SMEs.
In terms of taxation, the Programme emphasises that progressing currently tabled legislative proposals will be the central focus, stating that the EU “need to agree on the new rules on withholding tax procedures, the proposal to prevent the misuse of shell entities for tax purposes and a series of measures to modernise the EU’s ValueAdded Tax (VAT) system and make it more resilient to fraud by embracing digitalisation. Furthermore, we need to advance on the proposal to improve business taxation (BEFIT and transfer pricing) and the comprehensive reform of the EU Customs Union.” The Programme document claims that the BEFIT proposal on business in Europe: framework for income taxation could reduce tax compliance costs for businesses operating in the EU by up to 65%.
It also emphasises as priority progressing the Commission’s regulatory fitness and performance programme (REFIT), establishing a Head Office Taxation system to simplify rules and cut tax compliance costs for SMEs expanding their operations across borders as a key priority for 2024.
OECD Webinar on MLI to Implement Amount A of Pillar 1
On 26 October, from 15:30-17:00 CEST the OECD will hold a webinar on the recently published text of the multilateral convention (MLC) related to implementation of Amount A of Pillar One, agreed by the IF’s Task Force on the Digital Economy and not yet open for signature. According to the OECD, the text of the MLC reflects the consensus achieved to date, with different views among countries on a “handful of items in footnotes by a small number of jurisdictions”. The text “moves the international community a step closer towards finalisation of the Two-Pillar Solution to address the tax challenges arising from the digitalisation and globalisation of the economy”, the OECD stated.
The webinar will explore the key features of the MLI, in particular: applying Amount A rules; tax certainty framework for Amount A and related issues; and, removal and standstill of digital services taxes and relevant similar measures.
Registration for the webinar is possible here. It will be conducted in English, and available for replay on the OECD website in due course.
EU Tax Observatory Calls for Global Minimum Wealth Tax
The EU Tax Observatory has called for a global minimum tax of wealthy individuals in its Global Tax Evasion Report 2024, citing statistics that the effective tax rates of billionaires is equivalent to 0% to 0.5% of their wealth, far less than ordinary citizens.
The report also takes aim at the effectiveness of the OECD BEPS measures in fighting international tax evasion and harmful tax competition, stating that the proposed 15% minimum corporate tax rate for multinational companies is not only “far too low” but “has been made largely toothless by a series of loopholes and “carveouts”.
The report examines trends in global offshore tax evasion, global corporate profit shifting, new forms of international tax competition, tax deficits in high net worth individuals and sets out proposed policies to collect the tax deficit of multinationals and wealthy individuals.
C-524/23 EU Commission v Belgium – Improper Implementation of CFC Rules
The Official Journal of the European Union has published details of Case C-524/23 brought by the European Commission against Belgium concerning an alleged an improper implementation of the ATAD’s CFC measure.
The European Commission is seeking orders that the Kingdom of Belgium has failed to fulfil its obligations under Council Directive (EU) 2016/1164 of 12 July 2016 laying down rules against tax avoidance practices that directly affect the functioning of the internal market, by failing to correctly transpose Article 8(7) of ATAD.
The selection of the remitted material has been prepared by:
Aleksandar Ivanovski & Brodie McIntosh