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Semeta Seeks Swift Progress On FTT, Tax Evasion

by Ulrika Lomas, Tax-News.com, Brussels

15 November 2012


European Commissioner responsible for Taxation Algirdas Semeta has urged European finance ministers to ‘move forward quickly’ on plans for a financial transactions tax (FTT) for participating member states.

To move forward, all 27 EU member states and the European Parliament must agree to allow the Commission to draw up plans for a FTT within the framework of enhanced cooperation.

At the latest European Economic and Financial Affairs Council meeting in Brussels, Semeta insisted that such plans are not only fully justified but also strongly grounded and legally compliant.

Semeta said: “Our analysis showed that enhanced cooperation on FTT will not undermine the Internal Market. On the contrary, it will significantly reduce its fragmentation and will strengthen it. No evidence – economic or otherwise – was found that challenged this conclusion.”

Semeta added: “This stage of the procedure is about allowing the 11 member states to go ahead with an FTT in the context of Treaty provisions - as opposed to inter-governmental cooperation - while, of course, respecting EU law."

“In this context, it is important to understand that the alternative to enhanced cooperation is not the absence of financial sector taxation. It is the implementation of 11 different national forms of FTT instead of a single one.”

“So for everyone in the Single Market, a common approach – even if not at 27 – is preferable to a patchwork approach, to avoid complexity and added burden for businesses and investors.”

Currently, 11 member states have so far written to the Commission stating that they would like to participate in FTT plans, namely France, Germany, Austria, Belgium, Portugal, Slovenia, Greece, Italy, Spain, Slovakia and Estonia. The Netherlands has also very recently expressed an interest in participating, albeit on the proviso that exemption is granted for pension funds.

During the course of his address, Semeta lamented the lack of progress to date as regards negotiations with Switzerland and four other 'third countries' on savings taxation, pointing out that this is a chance for the Commission to discuss ways in which to improve the fight against tax fraud and evasion with international partners.

Agreeing to launch negotiations does not in any way pre-empt the end result of these talks, Semeta argued, noting that he has already, many times, reassured Austria and Luxembourg that they can oppose the outcome of the negotiations if they consider it to go against their interests.

Questioning the arguments being used to oppose progress, Semeta stated that:

“If some member states want to maintain bank secrecy domestically, for their own residents, that's their choice. Our discussions do not put this into question.”

“But this argument doesn’t fly when it comes to taxing non-residents. The EU approach does not impose anything on Austrian or Luxembourger residents. It only allows the other 25 member states to ensure the fair taxation of their own residents, according their national rules.”

“Looking for equivalence in treatment from Switzerland is our common endeavour. And Luxembourg and Austria should know that the negotiations are about ensuring a better savings system, not about targeting them.”

Concluding, Semeta pointed out that EU leaders have, on three separate occasions this year, called for “rapid” progress on this file, explaining that the European Council fully recognizes its significance in the fight against tax fraud and evasion. Semeta urged finance ministers to deliver on this demand.

On the issue of tax fraud and tax evasion, the Ecofin Council issued its statement, outlining the conclusions adopted by the Council. The Council underlined the importance of intensifying action against tax fraud and tax evasion and welcomed the Communication on concrete ways to reinforce the fight against tax fraud and tax evasion, including in relation to third countries, presented by the Commission in July.

The Council took the view that when prioritizing steps to fight tax evasion and fraud, it will be important to pay attention to both the area of direct and indirect taxation, without connecting them, and to concentrate on actions for the short-term. Action at the level of member states will be essential to fight tax fraud and evasion, the Council said, although it was also concluded that common efforts should be made at EU level in areas where this would add value, increase coherence and efficiency of tax collection and help closing loopholes.

The Council said: “Beyond legislative instruments, the EU should consider pragmatic tax coordination at the level of the Council and support, where appropriate, coherent action in relation to third countries, while taking relevant work in international fora into account”.

“Furthermore, the EU should support the dissemination of best practices with regard to the national systems for enforcement of tax laws and effective collection of taxes”.

The Council said that it would like to see progress in the field of direct taxation, namely by carrying forward work and discussions on the revision of the Savings Directive and reaching a swift agreement on the negotiating directives for savings agreements with third countries. Other priority issues include ensuring effective information exchange between administrations and exploring the possibility of deepening administrative cooperation in the area of direct taxation.

In the field of indirect taxation, the Council emphasized the need to combat the considerable losses in the field of value-added tax (VAT), by continued work with and analysis of possible measures to combat tax evasion effectively, as well as ensuring effective information exchange between administrations and effective use of the existing computerized control system in the area of excise duties.

Finally, the Council stated that it is looking forward to the action plan to be submitted by the Commission together with a Communication on tax havens and aggressive tax planning.

TAGS: compliance | tax | investment | European Commission | tax compliance | Belgium | Netherlands | Portugal | Slovenia | tax avoidance | interest | law | capital markets | tobin tax | Estonia | Luxembourg | Slovakia | enforcement | agreements | tax planning | withholding tax | Austria | France | Germany | Greece | Italy | Spain | Switzerland | Europe

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