Weekly Tax News – 23 April 2018

EU reaction to the American tax reform and steel taxes

In March 2018, the European Union asked the OECD to look at the American tax reform. The chair of the high-level working group on taxation questions at the Council of the EU (Lyudmila Petkova) sent a letter to Pascal Saint-Amans (Director of the Centre for Tax Policy and Administration of the OECD) highlighting the concern of the EU Member States on the US reform of the corporate taxation and the possible consequences for EU companies. In December 2017, the finance ministers of France, Germany, Italy, the UK and Spain outlined their concerns to the American Secretary of the Treasury, Steven Mnuchin, referring to the base erosion and anti-abuse tax (BEAT) which they believe will only encourage US companies to do business with local partners, without targeting the erosion of the American tax base. In her letter to the OECD, Petkova raised also the issue of possible problematic trade and tax policies deriving from the application of the foreign derived intangible income (FDII) and the global intangible low-tax income (GILTI). In his response, Saint-Amans explained that the American tax rates are still around the average of the OECD member countries and that the tax reform has allowed the US to implement several BEPS actions (i.e. actions 2, 3 and 4).

In the meantime, the European Trade Commissioner Cecilia Malmström demanded a permanent and unconditional exemption for the EU from the customs duties of 25% on imports of steel and 10% on imports of aluminium into the US.

 

MEPs vote on new anti-money laundering rules

The European Parliament voted on 19 April 2018 on the fifth amendment of the EU’s anti-money laundering directive. In December 2018 it had reached an agreement with the Council proposing closer regulation on virtual currencies like Bitcoin, to prevent them from being used by terrorist groups for money laundering and other criminal activities. The reforms will allow any citizen to access data about the beneficial owners of firms that are active in the EU. The Parliament hopes to make an important step towards fighting the corrupt use of letterbox companies created to launder money and tax avoidance.

Member states will have 18 month to implement the updated directive into their national law. 

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S&D calls on Council to push for tax transparency of multinational companies

The Socialists and Democrats of the European Parliament demand an explanation by the Council on why the Country-by-Country Reporting Directive has been blocked for over two years. The MEPs demand that certain Member States stop protecting the interests of multinational “tax evaders” and instead take a strong position for corporate tax transparency.

The Parliament adopted reforms last year which would ensure that all companies with a turnover above €750 million declare where they made their profits and where they pay taxes. Since the Parliament is not a legislator in tax matters it needs the Council to take action for the reforms to actually be effectual.

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