Economic and Finance Ministers met on 21 June 2024 for the final meeting in their ECOFIN configuration under the Belgian Presidency of the Council of the EU. Belgium hands over the Presidency to Hungary next Monday on 1 July 2024.

At the meeting, agreement was unable to be reached on the value added tax in the digital age (ViDA) package, despite progress in discussions between the Member States reportedly being made. The proposals have three main objectives: the introduction of Digital Reporting Requirements (DRR) and e-invoicing for cross-border transactions; updating the VAT treatment of the platform economy; and, a single EU VAT Registration, The proposals aim to tackle VAT fraud, support businesses and promote digitalisation. Reportsindicate that Estonia blocked agreement on the suite of ViDA proposals on the basis of objections over liabilities that would be imposed on digital platforms for short-term accommodation and passenger transport companies, such as Airbnb and Bolt. Estonian Finance Minister Mart Vorklaev said to Bloomberg ahead of the meeting that Estonia’s position was that: “We are against taxing any service provider only because they provide their services via digital platforms”.

The Council also approved a draft report to the European Council on tax issues, which provides an overview of progress achieved under the Belgian Presidency and an overview of the current status on the ongoing negotiation of tax files.

Also at last week’s ECOFIN, the EU Commission presented to the Finance Ministers the results of the 2024 European Semester Spring Package, exchanged views on the state of play of the implementation of the Recovery and Resilience Facility, adopting an implementing decision approving the modified recovery and resilience plan, submitted by Ireland.

OECD Director of Centre for Tax Policy Discusses Future of Business Taxation at the Oxford University Summer Tax Conference

The Oxford University Centre for Business Taxation held its Summer Tax Conference on the topic of “Business Taxation: Where are we and where are we going?” on 21 June in Oxford.

Notably, Manal Corwin, Director of the Centre for Tax Policy at the OECD gave a keynote at the conference. The keynote highlighted that over the last two decades, multilateral cooperation on tax matters has accelerated through OECD initiatives, with 147 member countries in the Inclusive Framework on BEPS and 171 in the Global Forum on Transparency. Ms Corwin emphasised that the BEPS project introduced 15 action points with 4 minimum standards, benefiting developing countries, although challenges remain in accessing and using CbCR data effectively. She noted that Pillar Two (Global Minimum Tax) took effect on January 1, 2024, with 36 jurisdictions implementing it and 20+ planning for 2025 or later. She also discussed that Pillar One (Amount A) is progressing with a nearing completion package. Increasing revenues from various taxes was highlighted as critical for SDG financing needs, and ongoing collaborative international cooperation essential. She stated there are concerns about the current application and template of CbCR, which need further examination.

Panel discussions examined the context of international tax cooperation over the past two decades, highlighting the substantial reforms brought about by OECD initiatives. These include ending bank secrecy, introducing standards to combat tax evasion and avoidance, and establishing global transfer pricing guidelines and the Global Minimum Tax. Grant Wardell Johnson, Global Tax Policy Leader, KPMG (Australia and U.K.) discussed that GLoBE rules aim to change multinational enterprises (MNEs) behaviour, with the top-up tax being the primary revenue raiser. Compliance costs are expected to decrease over time, though no permanent safe harbors exist. Marlene Parker, Deputy Commissioner General, Tax Administration Jamaica, discussed that developing countries worry they won’t collect significant tax from the Income Inclusion Rule (IIR) or Under-Taxed Profits Rule (UTPR) but see the Qualified Domestic Minimum Top-up Tax (QDMTT) as vital to protect their taxing rights. Jamaica is working to implement QDMTT swiftly, alongside corporate tax reforms, migration law changes, and strengthening anti-abuse provisions. The Subject to Tax Rule (STTR) was highlighted as being crucial for developing countries to enhance domestic resource mobilisation.

Paul Oosterhuis, Skadden Arps, discussed the U.S. perspective on the OECD Two-Pillar Solution that implementing OECD Pillar 1 and Pillar 2 projects through treaties and conventions in the U.S. is unlikely due to political dynamics and the legislative process. The outcome of U.S. elections and resulting political control will influence the likelihood of tax legislation being passed. Key issues for Pillar 2 compliance in the U.S. from his perspective include the treatment of the R&D tax credit and adopting a per-country limit for the Global Intangible Low-Taxed Income (GILTI) provision. The U.S. opposes unilateral digital services taxes (DSTs) imposed by other countries and focuses on addressing inbound base erosion. There is potential tension between addressing inbound base erosion and providing certainty for U.S. multinationals through Amount B in Pillar 1.

The development of the UN Framework Convention on International Tax Cooperation was discussed by Michael Lennard, UN & Chenai Mukumba, TJN Africa, and that in 2022-2023, the African Group advocated for a UN Framework Convention on International Tax Cooperation, leading to the creation of an Ad Hoc Committee to develop terms of reference by August 2024. Key issues include decision-making, avoiding duplication with OECD, scope, and simplicity. The speakers set out that the African countries seek an inclusive, democratic global platform through the UN Convention to contribute to international tax rules and address unfair taxing rights allocation, focusing on structural reforms rather than just capacity building.

25 June 2024: CFE – Accountancy Europe Members’ Only Webinar: New EU AML Rules – What Changes for Practitioners?

In 2021 the European Commission put forward an ambitious package of legislative proposals to strengthen the EU’s Anti-Money Laundering (AML) rules – “the AML Package”. After more than two years of negotiations, the European Parliament adopted the AML package on 24 April 2024. Accountants, auditors and tax advisers play an important role in keeping European citizens safe from money laundering and terrorist financing. The new AML rules will bring significant changes for these professions.

CFE Tax Advisers Europe and Accountancy Europe have partnered to help member bodies, tax advisers, accountants and auditors better understand the changes. We will address how the new requirements will affect practitioners’ day-to-day work, why it’s important to start preparing now and where to start. This is an invitation-only webinar for CFE Tax Advisers Europe and Accountancy Europe Member organisations and their members. 

The discussion will take the form of a virtual fireside chat between Angela Foyle, Accountancy Europe AML Working Party Chair, Aleksandra Vasilić, Director AML Office, EY, and Rolf Declerck, President of the Commission on Quality Performance Review, Belgian Institute of Tax Advisors and Accountants, CFE Tax Advisers Europe.

Registration for Members of CFE and Accountancy Europe is now open via the following link.

EU Presidency Note on UN Zero-Draft Terms of Reference for a UN Framework Convention on International Tax Cooperation