By 2023, Brussels will present a new framework for business taxation by reducing administrative burdens, removing tax obstacles and creating a more business-friendly environment in the single market. The aim is to make the taxation of large companies transparent by publishing the effective rates. These are the deadlines on which the European Commission, led by Paolo Gentiloni, will work in the coming months in parallel with the global negotiations on the taxation of multinational companies initiated within the OECD.
“Today the member states lose tens of billions of euros every year due to fraud, evasion and tax avoidance” pressed Gentiloni explaining that the countries “about 50 billion euros a year due to cross-border fraud on VAT, 46 billion a year for international tax evasion by individuals, and between 35 and 70 billion a year due to the avoidance of corporate taxes ”.
Contrast the use of shell companies
The Befit (acronym for “Business in Europe: Framework for Income Taxation”) will provide a single regulation on corporate tax, providing a fairer distribution of taxation rights among Member States. Measures that promote productive investment and entrepreneurship, better safeguard national revenues and support green and digital transitions are also part of the fiscal agenda for the next two years. Greater transparency on the tax contribution of large companies will be ensured by the publication of the expected effective tax rates. The abusive use of shell companies will also be countered through new measures against tax avoidance. The bias due to the current corporate taxation will have to be overcome to encourage companies to finance their activities through equity rather than resorting to debt.
The role of the OECD
On shell companies, the Commission will propose new monitoring and reporting requirements so that tax authorities have better oversight and can better respond to aggressive tax planning through these entities. These are companies that have little or no substance and economic activity and in some cases can only be used for aggressive tax planning. Brussels is working on the assumption that a global agreement will be reached at the OECD on the partial reallocation of taxation rights and on the effective minimum taxation of the profits of multinationals, made possible with the American shift in favor of a minimum taxation of 21% on the latter. .
Gentiloni: “Tax systems to be adapted”
Paolo Gentiloni, commissioner for economics, notes that “while our economies are transitioning to a new growth model supported by NextGenerationEU, our tax systems must also adapt to the priorities of the 21st century. We must work to seize this opportunity, while ensuring that an international agreement protects Europe’s fundamental interests. Today we are establishing how a global agreement will be implemented in the EU and the other steps we will take over the next three years to increase tax transparency and help small and large businesses to recover, grow and invest ».