On May 9, 2018 the Dutch Ministry of Finance sent a summary of discussions of the EUROGROUP meeting of April 27, 2018 and of the informal ECOFIN Council to the Dutch House of Representatives. Once again these summary of discussions give an interesting insight in the discussions that were held. In this article we will focus on the summary of discussions of the tax subjects that were discussed during the informal ECOFIN Council of April 28, 2018.
Improving the administrative cooperation in the area of VAT
The Ministers discussed in detail the need to amend the Council Regulation on administrative cooperation and combating fraud in the field of value added tax. All the more because according to an estimate of the European Commission EUR 50 billion in tax revenue is lost due to VAT fraud. Almost all countries recognized that more measures to improve the collection of VAT should be taken and that trust between tax authorities should be further improved. However, some smaller Member States were critical about the impact the joint audits might have on their limited capacity.
Taxing the digital economy
The chairman of the Organization for Economic Co-operation and Development (OECD), Mr Angel Gurría, made an introduction to the subject. Mr Gurria pointed out that worldwide the awareness is growing that the current tax system is not able to adequately include digital services in the levying of taxes. The OECD therefore sees a good opportunity to now develop a global solution for the digital economy. Mr Gurría also promised that the OECD would present a proposal in 2019 instead of the previously planned deadline of 2020. Mr Gurría stated that he hoped that these commitments could be taken into account in the EU Member States' deliberations of the proposals for the digital economy. A large number of Member States then indicated that they had concerns regarding the consequences of the interim solution (as proposed by the European Commission). There were for example concerns that the interim tax will lead to double taxation and will have a negative impact on the EU's innovative capacity in the field of the digital economy. Furthermore some countries wondered whether this interim tax could not create an undesirable precedent for countries outside the EU to introduce similar revenue related taxes. In addition, the fear was expressed that this tax could become part of the increasing tension between the EU and the US on free trade. Some Member States did express their support for the interim solution. In their view it can still take a long time before a global solution is found. According to these Member States this means that large internet companies would enjoy an undesirable tax advantage. The chairman of the meeting indicated that he would take all views into account when assessing on how to proceed with this matter.
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