Annual tax report

The European Parliament adopted a resolution on the Annual Tax Report.

Recalling that effective taxation is of fundamental importance for public authorities, especially in Europe, Parliament considers is necessary to consolidate the tax system, together with fairer and more targeted distribution of the tax burden, is necessary to ensure fiscal credibility. It considers that the reduction of debt requires both expenditure restraint and tax increases, while growth-oriented tax changes must be given priority; whereas this will create the foundations for long-term growth.

Parliament notes that taxation is still a matter for national and in some cases local sovereignty and that Treaty changes would be necessary in order for decision-making on tax policies to be transferred from the national to the EU level. Under these circumstances, that an increase in scrutiny of budgetary procedures by the Commission should be mirrored by greater democratic scrutiny by the European Parliament.

The resolution makes certain recommendations on preventing double non-taxation, tax fraud and tax havens and increasing tax transparency. The main points are as follows:

• some tax harmonisation could be a key factor for encouraging growth and job creation. Tax policies must aim to foster European competitiveness and lower costs for European business, particularly Small and Medium-sized Enterprises;
• Member States should make their tax systems more growth-friendly by improving tax design and implementing shifts towards less distortionary taxes while safeguarding the social market objective;
• it is necessary to simplify of VAT regimes in order to eliminate double taxation and bureaucracy for employers;
• a low tax level is essential not only for the social welfare of families and households but also for competitiveness and new jobs; stresses the need for controlled and efficient public spending and stable public finances;
• proposals from the Commission regarding taxation must contribute to European competitiveness by eliminating distortions of competition which arise from the various taxation systems in place; they must not contribute to increased tax burdens;
• in Member States with high deficits or which have suffered the worst decline in GDP growth, tax reforms should prioritise closing loopholes and broadening the tax base, without affecting the capacity of Member States to collect revenue;
• that fiscal federalism might be a useful tool in order to achieve self-responsibility in tax management at regional level and so entails greater economic efficiency
• the Commission and Member States must cooperate further on their respective tax policies against double taxation, tax fraud and tax evasion;
• Member States should look to reduce the tax compliance costs for SMEs, where possible, by streamlining procedures and reducing bureaucratic costs;
• Member States should swiftly adopt the existing proposals and on the Commission to put forward proposals in line with the proposals made by the European Parliament on savings taxation, green and consumption taxation, avoidance of tax fraud, good governance and double taxation;
• a coordination of tax policies could be an important component of a fiscal consolidation strategy at EU level and improve the effectiveness of the Member States’ new tax policies.

In order to remove cross-border tax obstacles for EU citizens, Parliament calls upon the Commission to:

• share information about best practices in the EU Member States and in other OECD countries concerning tax information to citizens and businesses;
• propose ways of simplifying tax compliance in cross-border situations;
• more actively pursue complaints and ensure greater transparency and information for citizens on the results of complaints about Member States’ tax laws and infringement cases in the tax field, as well as on their follow-up;
• reinforce administrative cooperation among Member States in the field of double taxation, including by concentrating more projects and resources of the Fiscalis programme on solutions to taxpayers’ concrete problems.

Member States are asked to support the Commission’s plans to improve the coordination and cooperation with and between Member States’ tax administrations on appropriate solutions to prevent double taxation and other cross-border tax obstacles.

Stressing the need to remove discrimination and double taxation for EU citizens and businesses, the resolution welcomes the Commission’s idea of setting up a working group on double taxation problems, involving tax authorities of Member States and, where appropriate, consumer associations. It calls on the Commission to initiate a new VAT forum, and to propose a binding dispute settlement mechanism covering double taxation suffered by individuals and businesses.

Member States are asked to:

• improve the procedures which allow Small and Medium-sized Enterprises to claim back more quickly VAT which they have paid, thus shortening the reimbursement period;
• modernise and update the rules on cross-border relief for companies and to simplify and modernise electronic invoicing rules with a view to ultimately creating a single ‘European e-invoice template’.

Lastly, in the area of tax fraud, the resolution notes that there is a need to strike a proper balance between the public interest in combating abuse, avoiding disproportionate restrictions on cross-border activity within the EU, and better coordinating the application of anti-abuse measures in relation to third countries. It regrets that some Member States have concluded agreements with third countries that permit the continuance of tax avoidance and tax secrecy.

Member States are called upon to:

• set up and implement effective tax systems that prevent their tax bases from being unduly eroded because of inadvertent non-taxation and abuse;
• apply anti-abuse measures to target artificial arrangements designed to circumvent national legislation or Community rules as transposed into national legislation;
• continue to share information about aggressive tax planning schemes on corporate losses and their detection and response strategies, and to measure and then publish information on the effectiveness of the strategies used;
• consider the introduction of cooperative compliance programmes and the introduction or revision of disclosure initiatives targeted at aggressive tax planning schemes;
• finally conclude the reform of the Savings Tax Directive to enforce automatic information exchange, which has been blocked for some time in the Council, in order to ensure fair and appropriate taxation of savings in the EU;
• provide tax incentives for SMEs, such as tax exemptions and cuts, to encourage entrepreneurship, innovation and job creation;
• promote reforms to limit the room for tax evasion by establishing efficient revenue-collecting mechanisms.

Members ask Member States to give top priority to combating the use of tax havens for illicit purposes and calls on the Commission in cooperation with the European Parliament-taking into account, as a first step, the OECD definition and list of tax havens or secrecy jurisdictions -to establish an EU definition and list. It calls for a single European agreed definition, pending agreement on a definition at global level.