EC Sets Out Customs And Tax Agenda

by Ulrika Lomas, for LawAndTax-News.com, Brussels

28 October 2005

The European Commission announced on Wednesday that it has adopted a comprehensive plan of Europe-wide taxation and customs measures that would help the EU to achieve its Lisbon objectives.

The plan lists existing and forthcoming Commission taxation and customs initiatives aimed at reducing compliance costs and red tape; helping Member States to maintain stable revenue streams; generating more competition in the markets; boosting trade; and encouraging research and development.

The measures proposed are not intended to change the structure of Member States' tax systems or to impinge on their national fiscal sovereignty. Instead, according to the EC, they are simply aimed at reducing the negative effects which co-existing national tax systems can have on market integration.

"The right taxation and customs policies can contribute to raising the efficiency of EU economies and the competitiveness of EU companies" explained EU Taxation and Customs Commissioner László Kovács, continuing:

"With globalisation and increasing cross-border activity, a Community approach on some tax and customs issues would be of considerable benefit to business and trade."

At present, several aspects of the functioning of the 25 national tax systems prevent the advantages of a single market from being fully exploited and impose unnecessary extra costs on EU businesses. In addition European companies are facing an increasing number of international challenges and measures need to be taken in the customs area to improve the international competitiveness of EU firms.

Furthermore, an attractive tax regime for investment in research and development (R&D) and environmentally-friendly measures is essential to promote sustainable economic growth.

The Commission will, therefore, present a range of actions over the next 4 years that will be designed to pursue these goals. The most significant of these are:

• Proposals to modernise the Customs Code and promoting a better use of information technology in the customs area;
• A proposal to allow companies to use a single basis of assessment for corporate tax for all their EU-wide activities;
• Proposals to modernise VAT rules particularly the current VAT treatment of financial services, in order to improve efficiency and reduce costs, and of public authorities, in order to ensure a level playing field with the private sector;
• A Communication on ways of combating tax fraud in the EU;
• A Communication on R&D tax incentives that will set out the key EU legal conditions, highlight existing best practices and, where appropriate, set out the political message.

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