Business Taxation for the 21st Century

Key points:

The EESC

• welcomes the long-awaited Commission initiative for the strategy on business taxation in the 21st century. The EESC strongly supports and appreciates the fact that the Commission is aligning its work with the international discussions and agreements;

• encourages the Commission to pursue its Action Plan for Fair and Simple Taxation Supporting the Recovery Strategy, taking into consideration the EESC opinion Package for fair and simple taxation;

• welcomes the G20 Finance Ministers' endorsement of the agreement signed on 8 October 2021 by 136 out of 140 countries in the Inclusive Framework to reach a global and consensus-based package solution on how to allocate taxation rights among countries;

• underlines the effects of the complexity of such ambitious objectives, calling for uniform and globally concerted and coordinated implementation of Pillars 1 and 2;

• emphasises the need for implementation of the tax package both in the EU and, at the same time, in major trading partner countries. If Pillar 1 is not implemented in the US and other major trading partners at the same time, European businesses may be at a competitive disadvantage;

• underlines the importance of having exactly the same rules in Europe concerning Pillar 2 and the effective corporate minimum tax, as the agreed complex rules worked out in the global agreement. Member States should therefore allow sufficient time for a final agreed text to be available before adopting a directive;

• backs the Commission in fighting the abusive use of shell entities aimed at money laundering, aggressive tax planning by individuals and corporations and tax evasion. The EESC looks forward to expressing its views on a concrete proposal addressing the abusive use of shell entities;

• welcomes the initiative of the Commission to create a Debt Equity Bias Reduction Allowance (DEBRA). Investments in new greener technology are connected with a high risk for the investor. In such situations, equity financing is particularly important and the inherent bias against equity financing built into the tax systems needs to be addressed;

• welcomes the Business in Europe Framework for Income Taxation (BEFIT) with a single corporate tax rulebook and looks forward to being able to examine a detailed proposal;

• encourages the Commission to address cross-border remote working situations as an integral part of the business taxation strategy;

• encourages the Commission to review the coverage of the VAT system.