Bolkestein Speaks On Tax Progress In EU

by Ulrika Lomas, Tax-News.com, Brussels

22 March 2004

Speaking before the European Parliament's Committee on Economic and Monetary Affairs last week, Internal Market Commissioner, Frits Bolkestein outlined the progress made in the various tax initiatives currently in place or under consideration within the European Union.

Observing that: "The last years have been exceptionally active on the tax front with the Commission presenting many legislative proposals and some significant new initiatives," Mr Bolkestein went on to add that:

"We cannot rest on our laurels just yet. The next few months are a crucial time in the tax field and a time where Parliament has to play a key role. We recently made a number of tax proposals and more will follow, for which Parliament's opinion is urgently required."

Speaking with regard to the draft agreement with Switzerland, which is still under discussion, the Internal Market and Taxation Commissioner revealed that the EC is planning to present draft agreements modelled on it to Liechtenstein, Monaco, Andorra and San Marino.

He went on to express disappointment that several issues in the area of VAT remain unresolved, but suggested that nevertheless, it is in the area of direct taxation that there is a continuing need for action at an EU level.

"Personally, as well as the college of Commissioners, I strongly believe that our proposed approach of a single EU-wide tax base is, in the long term, the best response to the current challenges in the corporate tax field in the EU," he observed, continuing:

"A common tax base would be the most effective means of tackling the company tax obstacles which hamper our businesses and undermine their international competitiveness. This while fully respecting Member States' fundamental prerogatives in tax matters, in particular their right to set their tax rates."

"The Commission has consulted widely on ways to enable companies to use a single EU-wide tax base for their cross-border business. We plan to make a recommendation for a pilot scheme to allow Small and Medium Enterprises to use the tax rules of their home state for calculating their EU-wide taxable profits before the summer this year. You will recall that this Committee has supported this idea."

Condemning the strong opposition expressed by some member states to the possibility of an EU tax, Mr Bolkestein suggested to the Economic and Monetary Affairs Committee that there are other possible solutions to the problem, explaining that:

"One would be the mechanism introduced by the Amsterdam Treaty and developed by the Nice Treaty to allow "enhanced co-operation" between smaller groups of countries. After all, it will be unfair if some Member States are allowed to stand in the way of the elimination of tax obstacles to cross-border business when this is crucial to the development of the EU Internal Market, economic growth and job creation."

He concluded by announcing that:

"I hope that the next European Council will draw some conclusions concerning this question of whether enhanced co-operation could be utilised to make progress on an EU-wide tax base."

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