EU tax package seeks to crack down on tax fraud

Valdis Dombrovskis – Photo EC

(BRUSSELS) – A new Tax Package unveiled by the EU Commission Wednesday looks to intensify the fight against tax abuse and curb unfair tax competition in order to boost Europe’s economic recovery and long-term growth.

Fair taxation is seen as a top priority as a means of protecting public revenues, which will play an important role for the EU’s economic recovery in the short-run and prosperity in the long-run.

With EU Member States needing more than ever before to secure tax revenues to invest in the people and businesses, “we need to break down tax obstacles and make it easier for EU companies to innovate, invest and grow,” said the EC’s economy vice-president Valdis Dombrovskis: “Today’s Tax Package takes us in the right direction, helping to make taxation fairer, more user-friendly and more adapted to our digital world.”

The package also focuses on simplifying tax rules and procedures, to improve the environment for businesses across the EU. This includes removing tax obstacles and administrative burdens for taxpayers in many sectors, so that it is easier for companies to thrive and grow in the Single Market.

The new Tax Package is made up of three initiatives:

The Tax Action Plan presents 25 distinct actions to make taxation simpler, fairer and better attuned to the modern economy over the coming years. These actions will make life easier for honest taxpayers, by removing obstacles at every step, from registration to reporting, payment, verification and dispute resolution. The Action Plan will help Member States to harness the potential of data and new technologies, to better fight tax fraud, improve compliance and reduce administrative burdens.
The proposal on administrative cooperation (DAC 7) extends EU tax transparency rules to digital platforms, so that those who make money through the sale of goods or services on platforms pay their fair share of tax too. This new proposal will ensure that Member States automatically exchange information on the revenues generated by sellers on online platforms. The proposal also strengthens and clarifies the rules in other areas in which Member States work together to fight tax abuse, for example through joint tax audits.
The Communication on tax good governance focusses on promoting fair taxation and clamping down on unfair tax competition, in the EU and internationally. To this end, the Commission suggests a reform of the Code of Conduct, which addresses tax competition and tackles harmful tax practices within the EU. It also proposes improvements to the EU list of non-cooperative jurisdictions, which deals with non-EU countries that refuse to follow internationally agreed standards. This has, so far encouraged third countries to adopt tax good governance standards, but more needs to be done. The Communication also outlines the EU’s approach to work together with developing countries in the area of taxation, in line with the 2030 Sustainable Development agenda.