Corporate Tax

EU minimal company tax directive anticipated earlier than the tip of the yr –

Days after 136 countries agreed on an international tax treaty, a European Commission official announced that an EU directive to implement the minimum corporate tax rate could be presented this year.

In a panel discussion, Benjamin Angel, Director of Direct Taxes and Tax Coordination at the Commission, announced that the minimum corporate tax would be implemented “as soon as possible” at European level.

The tax treaty, agreed under the auspices of the Organization for Economic Co-operation and Development, aims to reduce tax competition between countries and tax evasion by companies.

The deal includes two reforms of the global tax system. First, part of the profits of large companies should in future be allocated to the jurisdictions in which the income is generated and not to the headquarters of the company. Second, it sets a minimum effective tax rate of 15% for large companies.

136 countries agree on international tax reform

More than 100 countries agreed on a reform of the international tax system on Friday (October 8th) to prepare it for the digital age and to respond to long-standing concerns about corporate tax evasion.

While the first part of the agreement is not planned to be implemented in the coming months, the second part of the agreement could be implemented quickly.

According to Angel, the EU executive could propose a guideline before the end of the year, depending on how quickly the OECD publishes its model rules for implementing the minimum corporate tax rate.

He stressed the importance of implementing the agreement at European rather than national level.

More tax transparency

Angel also announced that the Commission would accompany the directive with an additional draft law to ensure transparency. Under this proposal, companies falling within the scope of the minimum tax rate would have to publish how much effective taxes they pay in each country.

“The content of the directive will be extremely simple. The effective tax rate you need to charge per jurisdiction – make it public, ”Angel said.

Meanwhile, the passing of the tax treaty was approved by G20 finance ministers at a meeting in Washington DC on October 13th. EU Economic Commissioner Paolo Gentiloni called it “nothing less than a tax revolution”.

“The green and digital transition can only take place if it is based on fairness. So this reorganization of global corporate taxation is a fundamental part of the change that we need to see: everyone has to pay their fair share, ”Gentiloni said in a statement.

Not all politicians share the enthusiasm for the agreement. Paul Tang, an EU social democrat lawmaker, complained that the deal was negotiated between governments without public participation and said the minimum tax rate was too low.

“Hopefully 15% will just be a starting point,” said Tang.

[Edited by Benjamin Fox]

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