Good afternoon. The goal of this first tax package of this Commission is very clear: to make life easier for honest taxpayers, and to make life harder for those actively trying to cheat the system.
Much progress has already been made to shut down opportunities for tax fraud and evasion and to combat aggressive tax planning, in Europe and globally. But that work is far from concluded, as I think is clear to everyone. Annual revenue losses in the EU due to international tax evasion by individuals are estimated at €46bn; to corporate tax avoidance at more than €35bn; and cross-border VAT fraud at €50bn. Which is more than 150bn overall.
This is a scandal. And this scandal cannot continue unchecked. Especially in this time of crisis and in order to build a lasting recovery, everyone must play fair and pay their fair share.
These principles must apply to all, whether we are talking about companies operating on or offline. Tax transparency must cover the digital world, and tax authorities need to have the right tools to ensure that those who profit from digital platforms pay tax just like everyone else.
Also, fairness must not stop at the EU's borders. This is a global principle and essential for global recovery.
Tax action plan
Our Tax Action Plan, contains a set of 25 measures aimed to reduce tax obstacles for businesses, better fight fraud and promote compliance by taxpayers.
In the area of VAT, some concrete examples include:
-Proposals to simplify VAT rules in many different sectors;
-Proposal aimed at adapting EU VAT rules to digitalisation, by increasing the use of IT to ease compliance and improve the fight against fraud;
-And proposals to prevent and resolve disputes in the area of VAT, to improve legal certainty, neutrality and fairness, and avoid cases of double taxation.
In other areas of taxation, the plan also includes measures to:
-Facilitate and promote tax compliance for businesses, together with Member States, based on cooperation, trust and transparency.
-And reduce tax barriers for cross-border investments, by exploring the possibility of a common, standardised system for withholding tax relief, as well as enhanced exchange of information and cooperation mechanisms.
The second initiative is the extends EU tax transparency rules to digital platforms and it is strongly needed.
Member States will be gives the tools to automatically exchange information on the income earned by sellers on digital platforms, to ensure appropriate tax collection, while limiting administrative burdens for platforms themselves.
The rules will apply equally to all platforms. These rules capture the provision of services, the sale of goods, rental of property, rental of any mode of transport and investment, and lending in the context of crowdfunding.
Our proposal introduces uniform reporting obligations for digital platforms on income earned by those selling goods or services through these platforms.
Platforms will report only in one selected Member State and only once per year. This will considerably simplify procedures for them. Member States will subsequently exchange the information reported, which will help them identify when tax is due to them from sales via platforms.
Obviously, this proposal only establishes reporting rules to fight tax fraud, and not any kind of rules on how the income of digital services should be taxed. This is an important distinction to make with the ongoing discussions at the OECD, we will discuss also at the end of this week at the G20 summit, and here we are discussing the automatic exchange of information to fight tax fraud.
Tax good governance
And finally, on tax good governance, we are setting out the EU agenda for tackling unfair tax competition and strengthening good governance standards in the EU and globally. Because we have an internal target and a global one.
-the next steps to strengthen the EU list of non-cooperative tax jurisdictions;
-first ideas for the reform of the Code of Conduct on Business Taxation;
-and measures to support developing countries, because we have not only the list of non-cooperative tax jurisdictions, we also have a strategy and money to help developing countries in the tax area, in light of the Sustainable Development goals.
Since we introduced the first EU-level blacklist of global tax havens four years ago, 95 jurisdictions have been assessed and over 120 harmful tax regimes have been eliminated. Now we are moving to strengthen this tool.
And as you know just yesterday, building on rules in place to prevent EU funds from supporting projects that contribute to tax avoidance, the Commission recommended that member states not grant financial support to any companies with links to blacklisted jurisdictions.
And today we are announcing further measures to make the listing process more effective:
-We want to update the scoreboard used to select the jurisdictions we screen, to include the most recent data and ensure all risks are covered, including the one on terrorism.
-We also want to review the criteria that jurisdictions must comply with, to reflect the latest international developments in the fight against tax avoidance and evasion decided at OECD and G20 level.
As regards the Code of Conduct, we would like to see its mandate expanded to take into account new practices that lead to unfair tax competition and aggressive tax planning within the Union.
This may include, for example, particular tax residency rules which can lead to double non-taxation or general tax exemptions, which may favour harmful tax practices without appropriate safeguards.
Special citizenship schemes or measures to attract expatriates or wealthy individuals can also generate concern.
Most importantly, however, we believe minimum effective taxation should be introduced as a parameter to make sure that there is no unfair tax competition among jurisdictions, inside and outside the EU. And the discussion with Member States on this proposal aill be very very important.
Today's initiatives are only the first parts of a comprehensive and ambitious EU tax agenda for the coming years. As you know this is a long-lasting initiative.
In the autumn, the Commission will set out its plans for business taxation for the 21st century. This will complement work underway at global level to address the challenges of the digital economy and ensure all companies pay their fair share. These are the pillar one and pillar two of the discussion at OECD and G20 level that the European Commission is supporting.
Moreover, taxation has a key role to play in the context of the Green Deal. In the first half of 2021, we will propose a revision of outdated EU rules on energy taxation, removing implicit subsidies for fossil fuels. We will also set out plans for a WTO-compatible carbon border adjustment mechanism, to deter companies from shifting production to countries with less stringent green regulations.
As you can see, we are working for lasting and systemic change. Not for single steps only. Decisions on taxation are never easy in the EU, also because of the rules that we have, but anything is possible when the political will is there. And I know we have a strong political will also from German Presidency and for the sure, the European Parliament also shares the political will of the European Commission.
In recent years, successive tax scandals piled pressure on governments to make change happen — and it did.
Now we must muster similar ambition not only to respond to the unprecedented economic shock caused by the pandemic, but to seize the opportunity it presents to transform our economies and societies for the better.