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Šemeta Speaks On Tax Fairness

by Ulrika Lomas,, Brussels

13 February 2014

At an EU Competition Forum this week, Algirdas Šemeta, Commissioner responsible for Taxation and Customs Union, Statistics, Audit and Anti-fraud, EU Tax policy and Competition policy, spoke in favor of "fair tax competition."

"First, fair tax competition is essential to preserve the integrity of our Single Market," he said. "Therefore, we cannot accept national measures that encourage tax shopping by citizens and businesses, or that are designed purely to steal the tax base of neighbours."

"Countries should not have to compensate for the aggressive tax planning of some companies, by increasing the burden on the rest of the business community. Nor should smaller, local and less 'well advised' businesses be at a disadvantage, in trying to keep up with their tax-avoiding competitors."

However, Commissioner Šemeta did speak in favor of competition, saying: "I do not advocate an across-the-board harmonization of Member States' tax systems. Tax competition can be something very positive, too. Healthy and fair tax competition can contain the tendency of certain governments to use tax hikes as the solution to all their problems."

Šemeta then addressed particular issues on the "fair tax" scene:

"Patent Boxes are currently being examined. And as part of this work, the question of how to interpret the criteria on real economic activity has been raised. This discussion is extremely important, as it could result in solutions to the wider approach to profit allocation."

"The transparency of tax rulings is another important topic recently addressed under the Code. And as a result, Member States have agreed to a policy on spontaneous information exchange."

"And third, we are in dialogue with Switzerland, within the framework of the Code of Conduct. The aim is to secure a Swiss commitment for a precise timetable to phase out certain harmful regimes that do not comply with our standards."

Reverting to the concept of coordination, Šemeta remarked:

"The second important coordination tool I want to briefly mention is the Action Plan to tackle tax evasion and avoidance, which I presented in 2012. This is the EU response to the challenges that are being tackled globally through the BEPS Action Plan."

Concluding, he said:

"I warmly welcome the G20 finance ministers' decision last year to fight base erosion and profit shifting BEPS. The OECD's Action Plan, together with EU initiatives, offer all elements needed to ensure fairer tax competition worldwide."

TAGS: tax | business | tax planning | transfer pricing | Switzerland | G20 | standards | Tax

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