- “Thank you. I agree with what Marco and Jose have said so we'll focus on other questions. The remark from the Maltese colleague that we need to pay attention to competitiveness and fiscal sovereignty. I do think that both the OECD and the European Union pay an extreme attention to sovereignty and to the competencies of the government and national parliament. The OECD works by consensus and as you know in the European Union in the tax field the rule is unanimity so no legislation applies to a country unless it has explicitly agreed this legislation and that goes also for the legislation we have mentioned pillar two etcetera. That says we take competitiveness very seriously. As you know the Van der Leyen Commission has an important competitiveness agenda and as far as taxation is concerned we are in the process of doing a systematic review of all EU tax legislation in the direct tax field with a view to proposing simplification an ambitious one around June next year so that is a top priority for us. I move to finish on digital taxation to the question of the Greek member of the parliament how long can we wait a deal on pillar one that's a fair question and the answer to this question depends probably whether you take the short view or the long view. For the short view for you and I it seems very long we have been discussing for years and years already now if you take the long view pillar one is about revolutioning a system that is in place for nearly one hundred and fifty years. It's about introducing taxation based on the destination based on the country of the customer and if you introduce a revolution then it takes time. It takes time especially because of the governance rules as I said we always find ourselves in the European Union our system frustrating because reaching unanimity is twenty seven is very difficult now imagine reaching consensus at one hundred and forty five this is what the OECD increasing framework is trying to do we're nearly there but it takes time and it's worth waiting. Thank you.”
Priorities of taxation policy in the EU · EU competences on taxation · Competitiveness matrix
- “What conclusion should we draw on our existing legislation from the fact that pillar two brings a sufficient level of certainty in terms of tax coverage for the NIS, which are in scope. So basically, this is part of the element that we have to take into account when evaluating and reviewing the anti-tax avoidance directive. At that, they are clear element of interactions that will need to be scrutinized closely. And I'm thinking in particular to the CFC rules. And next year when the Commission puts on the table a simplification omnibus in the tax field, we will certainly by then have come to a conclusion on how to better take into account pillar two and maybe, maybe lift some existing rules for all the companies which are in scope of. I'm not talking of lifting it in general, because we have to keep in mind that pillar two applies only to the tip of the iceberg, only to the companies with a turnover above €750 million. But for those companies, we should try not to overdo it. And that is certainly a part of our reflection for the coming months. Nadine has mentioned that the tax revenue coming from pillar two is is limited. It is true, it is limited. But this is not a surprise. And this is not a sign of dysfunctioning of pillar two.”
Priorities of taxation policy in the EU · Tax Havens
- “One remark before going to the tax omnibus. Taxation matters also for raising the necessary resource for ensuring competitiveness. From now I'm a tax director but I've no, no, I was been in taxation before I was dealing with other issues including investment. If you look at the countries which attracts the most FDI in the world among the OECD country it's the OECD, it's the United States, it's Germany and France. None of the three are low tax jurisdiction. If you want to attract FDI you need plenty of things. Tax is just one element in a much bigger picture. You need good infrastructure, you need good education, you need rule of law, you need a well trained labor force etcetera. All this has a cost for which you need tax resources. So the main advantage of Pillar Two is to create a floor to tax competition. It does not prevent tax competition but it does allow each country to secure a set of certain level of income from corporate taxation keeping in mind that corporate taxation itself is just a small part of the resources of our member state because we always obsess by CIT but actually if you look at the resources of our member state in the EU in average the CIT is six, seven, eight percent depending on the country of the tax resources. Now moving to your question simplification is extremely important and there will be a tax omnibus next year. We are working on a systematic review of all tax legislation in the direct tax field and the proposal will be on the table somewhere in the middle of next year. I must say this is a difficult exercise because we are sometimes struggling in between on the one hand sometimes excessive expectation from businesses, not from Lucho but some businesses tell you. Absolutely you just have to delete all the anti tax avoidance directive. Well no but also on the other end an excessive conservatism of some finance ministries and tax administration. We have recently some countries telling us yeah simplification we're fully behind it but on one condition it should affect neither the tax income nor the tax system. Well good luck to find the tax measures that has no impact on any of the two. So clearly we need on the one hand the businesses to be sensible in their expectation and on the other hand we need member states to engage seriously and accept that if we simplify we have to let some element go.”
EU competences on taxation · Simplification measures (political compass) · Competitiveness matrix
- “Thank you Kiara and thank you for the invitation on this difficult topic. Let me start with a few words of introduction. This topic has started actually long ago, not under this Trump administration but under the first Trump administration. The first Trump administration is the one that created the concept of global minimum tax, that the one which created GILTI and BEAT. At that time in the United States, many started to push for a global approach on minimum tax since they were the only one to have it and was the only one to have a minimum tax. De facto, it's a disincentive to be headquartered in the United States. So behind the push towards pillar two at the origin, you have very much what is US request. The US never had the intention to implement pillar two themselves. The discussion has never been, even with the Biden administration, on whether the US would join pillar two. The discussion has always been on how we can ensure that the two systems coexist globally. A first balance has been reached with the previous US administration and the new administration has questioned this balance at the beginning of the year in a rather vivid term. If you remember, there was threatening also to implement the so-called section eight ninety nine which would have created very high withholding taxes on all flow of royalty, interest, and dividend from the United States to the rest of the world. The G7 has discussed possible compromise on a side by side solution but just the big picture that needs obviously to be flushed out in the OECD. So let me stress a few things. First, when you try to assess whether the US system is comparable to pillar two, this is actually a very difficult question. Most people focus on GILTI because this is the one that is catching the most attention but actually the US system is a combination of three different pieces of legislation. You have GILTI, just change of name indeed in NCTI now, you have BEAT and you have the so-called corporate alternative minimum tax which has been created by the Biden administration which applies to the biggest M and A, the one with a turnover above one billion euro and which has a reference rate which is reminding us some souvenir because the reference rate of the corporate alternative minimum tax is fifteen percent. So when you try to assess what is the effective tax rate of a US MNE, the answer is not straightforward and most studies tend to show that it varies to a bit below the reference point that we have in pillar two to significantly above depending of the sector. The other difference that we face which is a very clear one and easier to understand is a difference in the so-called blending approach. That is the United States system works with a global average and therefore the insufficient taxation in some jurisdiction can be offset by the significant taxation in high tax country while pillar two works with an average country by country where you cannot offset your taxes. So there is no doubt that pillar two is more efficient in disciplining the zero and low tax jurisdiction and incentivizing them in introducing a minimum taxation but from a company point of view the two systems both the US and the OECD one do have a pretty similar system which is effect which is ensuring a minimum level of taxation because the effect of the global blending versus pillar two is not on the absolute level of taxation but rather on where taxes are paid. Fourth, we focus a lot in the European Union on the complexity of pillar two and indeed this is a very heavy and difficult to understand set of rules and for this reason sometimes we always tend to assume that the grass is greener outside, you know, and that the United and that the US have would they have a comparative advantage with their own system. Well actually my advice to anyone holding this line is read the US legislation. The combination of GILTI, BEAT and CAN'TEE and the guidance of the IRS is one thousand seven hundred and twenty five pages, one thousand seven hundred and twenty five pages. They use different accounting rules depending on the legislation concern, sometimes financial accounting, some tax tax accounting. So in term of complexity it's even worse than pillar two actually. I'm not saying this to praise the complexity of pillar two but just to give to give it in perspective somehow. So we have started this discussion on on the side by side. The idea would be to refrain from applying pillar two to the US headquartered company and the subsidiary. This brings obviously a lot of questions and other jurisdiction are asking to consider an agreement which would not be US centric but which would have clear criteria for accessing a kind of side by side approach. It is difficult to have a clear prognosis on where this discussion will land and it is also obvious for us that whatever agreement comes will need to be accompanied with clear safeguards. To give an obvious example, if today we can consider that the taxation of US SMEs let's say is roughly equivalent to the one that we ask to our own companies, we need to be sure that one year down the road, two years down the road or three years down the road the United States will not come with a much different rate which would be much lower because that would change completely the picture. So if there is an agreement it cannot be an agreement forever. It needs to be an agreement under certain condition. At the same time we need to do our homework. We hear a lot of criticism from both the business community and the tax administration which has the same view which is it's complex, it's heavy. As you know, we have started a discussion on permanent safe harbor that is a permanent set of simplification of pillar two and that is certainly a very important priority on which we need to focus our efforts. Now to go back one second to the side by side, it begs also the question how we do it. We cannot under the directive consider the US system as equivalent because to consider it as equivalent one of the conditions set by law which is to have country by country approach is clearly not met by the US system. That is why our preference would be to try to construct it via safe harbor because in the directive you have dynamic link with whatever safe harbor may be agreed by the OECD. So if it is constructed as a safe harbor we don't even need to change the directive. It does not mean nevertheless that all pressure is out because we don't have to change the directive at union level but member states do have to change our national legislation because by law today the undertax profit rule does apply to US companies on the first of January. So if we want to change it it means that we need first a very quick agreement on the safe harbor at the OECD. I don't know whether we will manage because we're in the middle of this discussion and then twenty seven member state to or at least twenty two because five have a delayed implementation to change their legislation at light speed which is certainly very challenging. We all are trying to discuss in good faith in earnest trying to get a balanced deal. It's challenging and the clock is ticking but the wheel is there. Thank you.”
EU competences on taxation · Tax Havens · EU-US relations
- “Thank you. Um, pillar two is legislated, and this includes the TPR. It's I think it's important to keep in mind that TPR has entered into force in the European Union since the 1st January of this year, except for the one country covered by Utpa safe harbour. So there is no discussion on whether we want to or not, or TPR or not. It's a law as far as we are concerned. Uh, the only question that we need to solve ahead is how to better take into account Gilti. It's a fact that the United States have been a front runner in creating a minimum tax. The previous Trump administration actually was the first administration on Earth to impose on its multinational global minimum tax and make sure that they pay a sufficient level. So we are facing at the moment a reaction from some part of the Republican parties where they are telling us we were the first one to move. We took a risk. We did it at the moment where no one had it, and now you're telling us that we are not good enough. So we need to find a way to fine tune it. And this is very much a US specific situation, because no other country has a minimum tax, which is slightly different from globe. It's difficult to compare them. Just looking at the number, there are a number of differences which make comparison uneasy. For instance, uh, the substance carve out or the foreign tax credit are slightly more stringent for Gilti than they are in the OECD system. So you cannot just compare or it's 15 years.”
Tax Havens · EU competences on taxation
- “Something I wanted to say and then I have the occasion but it was mentioned briefly by Kimberly as well. The impression that the open are alone on pillar two is deeply mistaken. We are not alone actually if you include in pillar two the qualified domestic minimum top up which is one component of pillar two you have sixty countries which have legislated. Okay that's not the full planet but how many international tax agreement have already been supported and subscribed by so many countries so quickly. I think it's important to keep in mind that today we have countries implementing pillar twos on all continent: UK, Canada, Australia, New Zealand, Japan, Korea, South Africa, plenty on all continent. You have countries implementing pillar two. So what we're facing is a complex discussion with the United States on how to ensure the coexistence of the two system. We have indeed a certain reluctance from China and India even those that do participate in all the discussion and are even part of the steering group to move to the effective implementation stage. At the same time we have to keep in mind that neither China nor India are low tax jurisdiction. India is a very high tax jurisdiction actually considerably higher than we are ourselves and China itself is let's say more or less comparable to the EU average in term of taxation. So we're still working on it but it remains the best shot that we have for an international cooperation in the tax field.”
EU competences on taxation · Tax Havens
- “Thank you Pasquale for the invitation. It's a pleasure to be with you today. I will try to address two questions: first a small step back, why is it important to focus on the digital sector, and then the key question, DST or Pillar One. First, why is it important to focus on the digital sector? For more than a century, the tax system has de facto followed the smoke of factories. It is not very well equipped to follow the data stream. It is based on physical presence: you have a factory on your territory, you tax it. The difficulty with the digital sector is that this concept is extremely outdated. It is difficult to identify the location of the profit and the value is most of the time created by the user who interact with the platform. In other words, the key question is no longer where the factory or the data center is but where is the user clicking. The standard tools of the corporate income tax are also very difficult to implement on the digital sector. Take for instance transfer pricing: how to implement the so-called arm's length principle which is at the heart of the transfer pricing? What is the comparable that you have to use for a unique algorithm? It is not a surprise if the biggest and most complicated cases that we have faced in the competition field recently, such as Apple, were in the digital sector. Third, the business model of the digital sector involves usually a high number of loss-making years and this is due to the fact that digital companies seek market dominance as soon as possible to maximize a first mover advantage. They start with high capital expenditure like data center, they invest massively in intellectual property with R and D, with software, and usually they can immediately expense it which lead to a situation where they make no profit. Markets pay attention to the market share and the revenue growth, not so much to the profit, and that creates a situation where they do not make profit for many years and when they start making profit they are already reach a stage where they are digital giants which are arch dominant. To give you an example, for instance Amazon, the first large profit posted by Amazon, they had already a turnover of more than thirty billion dollars. So if we use a standard tool, de facto we come a bit late in the process. Fourth reason, we have clearly an issue of social fairness. Some giants like Amazon or Alibaba or Temu are in direct competition with ordinary shops. The shops, they are exposed, they are heavily taxed, they are exposed of all kind of possible risk. When we have a pandemic, they are closed. When we have violent demonstration, they can have damages. When they are dishonest people, they're exposed to shoplifting. The digital giants are clearly very convenient for all consumers but what would be our cities without shops? Would it be enjoyable? Last, and that's an important element to keep in mind and Pasquale has already alluded to it, the digital giants benefit from the infrastructure which are created by public investment. They need plants for the electricity they consume, they need networks for allowing users to access them, they need airport, train, road, postal systems for the delivery of the packs. So they should not free ride and benefit from infrastructure they do not contribute to finance. Which brings me to the key question: DST or Pillar One? What about DSTs? DSTs, digital services tax, are not a panacea but they are a possible answer to a legitimate concern. The Commission itself has stable back in 2018 proposal which was not intended to be a permanent proposal but which was intended somehow to be a temporary measure to help garnering support for building a multilateral solution. It was not adopted but it inspired nevertheless a number of country. You will hear some of them today. It inspired France, it inspired United Kingdom who was a member state at that time, Italy, Spain and to some extent Austria to introduce a DST which are following more or less what was proposed at European level. DSTs are not specifically European phenomenon. You have to keep in mind that there are DSTs virtually on all continent. There are DSTs in India, in Kenya, in Tanzania, in Nepal, in Kyrgyzstan, in Turkey with a big variety of rate. It goes from 1.5 percent in Kenya to a very high level in Turkey which is at 7.5 percent. But when mentioning this list, I guess everyone can have in mind that a situation where you would have an uncoordinated mushrooming of DSTs all over the world is a very suboptimal situation. If each country put on the table its own digital service tax with its own parameter, its own way of calculating, it's almost unavoidable that we would end up with double taxation, triple taxation, quadruple taxation and what goes with it. And what goes with it is tax disputes. So there is for this reason a true rationale in trying to go beyond unilateral solution and trying to build a multilateral solution and this is what the OECD inclusive framework has been trying to do for a number of years with Pillar One. Pillar One started very much as a request from the European to find a solution for taxing the digital giant and sharing the tax base of the digital giant. Then under the influence of the previous US administration it has been broadened to go well beyond the digital sector. So today it covers virtually all sector but it is still an answer to the challenges of taxing the digital sector because when you look at where the profit base that is shared would come from, actually a very, very substantial share is still coming from the digital sector. Last year the multilateral convention was more or less ready. The only reason why we could not move down was a persisting disagreement on an ancillary product which is not the convention itself but the so-called AMON B which is whether we should have a simplification on transfer pricing and how voluntary or mandatory it should be. The United States wanted a more ambitious approach, more mandatory. As European we had no problem with this request. We were fine with the draft as it was but we were also fine with US draft request on this topic. We have heard some back and forth from the United States as you certainly remember. On the first day of the Trump administration we got a quite vivid message coming from the White House that they didn't want to implement anymore the OECD discussion and wanted to walk out of it. But this message was outdated very quickly because a few months after the US delegate in the inclusive framework at the OECD actually confirmed the willingness of the United States to stay committed in working on a two pillar solution. But what they said is first we sought out the Pillar Two and once we have done it we resume the discussion on Pillar One. There is also some interest for the topic in the United Nation and there is clearly a push from the African in particular to have discussion in the UN which is currently working on a framework tax convention on digital. But we do think that the OECD inclusive framework remains our best shot for a number of reasons. First because the work has already been done. Second because the United States are part of the discussion while in the United Nation they are not. And it is difficult to imagine the added value of a deal on digital which would not involve the United States considering that a very large share of the digital giants are American company. If I were to use a metaphor, it's a bit as if we had a deal on banana plantation done by the Baltic state. Nice but a bit irrelevant. So we need to focus on the forum where everyone is involved and where all the key players are and certainly the inclusion framework is the one. The EU supports multilateral solution. It is enshrined in our DNA. Will we manage to rescue Pillar One? Honestly I don't know. Time will tell. We need to resume this discussion as soon as we are finished on Pillar Two. But what I know is that any alternative would be worse. And let me end by quoting an African proverb: if you want to go fast, go alone. If you want to go far, go together. Thank you.”
EU competences on taxation · EU rules on digital competition
- “On the contrary, pillar two has been constructed and it's an analogy I like to take very much as a behavioural tax. It is there to change the behaviour of the zero and low tax jurisdiction, and incentivize them to introduce some form of taxation on corporation if they don't do it. It creates income for the others if they do it. Very little income for the others. And the very fact that the first indications that we have is that pillar two is generating a relatively moderate income, because we start to have some first indications since for us it's been legislated for quite a while. It's just a logical consequence of the fact that many zero tax jurisdictions have introduced a corporate income tax. That's the case of the United Arab Emirates, for instance. That's the case of Jersey, of Guernsey. That's the case of Barbados, even though it's in an unusual way. So the more we have jurisdiction doing it, the less income we get. And it's not a sign of failure of pillar two. It is a sign of success of pillar two in the primary target attached to it, which is to level the playing field and make sure that we ensure a sufficient level of taxation of corporates wherever they are, and that all jurisdictions across the world can safely introduce a corporate income tax without facing undue pressure from the multinationals themselves. Thank you.”
EU competences on taxation · Tax Havens
- “Thank you. Before saying a word in the UN, let Mister say a small words in defense of CORE. I would not expect anywhere businesses to be happy with a tax proposal by definition and no tax proposal can claim perfection but two things I would like to say on CORE. First, it's simple, it's maximum zero point one percent rate and second, I understand as an economist that taxing turnover is not great but when you do it at the Union level it has one comparative advantage which is very strong compared to a profit tax which is turnover is an observable viable. You don't need any discussion to know what the turnover was. Profit is not harmonized because corporate taxation is not harmonized in the Union so if you build a known resource on profit you have as many calculation as you have member state. If you build it on turnover then you can know the result immediately. So I'm not saying it's perfect but that's one of the reason why this choice has been made. Now moving to the UN, it's a very difficult forum for us and it has two major difference with the OECD. The first one is that it works primarily with simple majority and simple majority can make a lot of sense in many areas but if the idea is to prepare a tax convention at the end and if we are still in a process where to cut it short all western countries are outvoted at each and every vote, what is the likelihood that these countries effectively ratify this convention? Because the convention needs to be ratified. By comparison the OECD works primarily with consensus so it is extremely difficult, it's slow but it creates a situation where there is a bit more ownership at the end of the process. So far we have had difficulties to be heard at each and every step. It has improved a bit in the last months but it is still challenging. The second difference is the support to the process. The OECD work is supported by a large highly competent staff so each time someone ask a question usually you get a lengthy answer from the OECD very sophisticated very complicated probably too complicated sometimes but there is no shortage of expertise. In the UN it's a bit the opposite so far the staff supporting the process is extremely light which means that the discussion remain very high level with a lot of political statement but not much concrete text to read. So you have three processes which are ongoing. You have the framework convention, you have the first protocol in the cross border services for which the immediate question is what will happen to the OECD pillar one because if the OECD pillar one restarts then we have a problem of somehow duplication of the work. And you have the second protocol which is dispute resolution which is a protocol in which the European Union and its member states are a bit more interested and the work on this work stream is even led by European Union member states, it's led by Germany today. As you said we engage in earnest, we engage in good faith, we will make effort to try to get to somewhere but I should have said that there is a third important difference with the OECD and this third important difference which is not to be underestimated in the tax field is that the United States are part of the OECD discussion. The United States are no longer part of the UN discussion. So you may wonder for instance if you have a protocol one day on cross border services starting with digital without the United States it's a bit challenging. Let's put it like this.”
Own EU resources
- “Thank you. First to Mister Doffen who's left. I'm sorry if I gave the impression that we're not taking the seriously enough the issue of small parcels. We are actually, as I said, we have two legislative proposals are in your hands. They are with the legislator on handling fees on the small parcels. Let's say we should not underestimate the difficulty. As I said we have around four and a half billion parcels entering the European Union every year. Less than one percent are controlled today. It's a huge logistical challenge for our customs and there is no easy solution when we face such a number. One minute on Pluto because I heard from the member of parliament from Portugal the impression that the United States would have some kind of shortcut and would not be subject to minimum taxation rules. Just to remind that the United States were first mover in the area of global taxation of companies. They have three set of legislation in place. They have GILTI, they have BEAT, they have the corporate alternative minimum tax also CHEMT which has been established by the Biden administration. The fact was they have one thousand seven hundred and twenty five pages of legislation on minimum tax on their companies and the effective tax rate on American company is broadly similar to the one which is imposed on the multinationals covered by Pillar Two. Sometimes it's slightly lower often it's higher. Last thing I would like to remind there is a fundamental difference in the US system and the, well there are several fundamental difference but one of them is that the US system does not have a threshold. The Pillar Two does apply to all companies I think a turnover above seven fifty million euro. The US legislation applied to all companies irrespective of their turnover. So saying that there is nothing in the United States I like Pillar Two I defend Pillar Two I work for Pillar Two but that would be unfair. They are something and that is why we're working at the moment within the OECD on having a side by side agreement on how to ensure the coexistence of the two system. Last why do not have why we do not have more digital giant in the European Union that's a very difficult question and the one we have been struggling for many many years. As we all know in the European Union we don't have a huge problem for start up actually we have a number of member states which have quite a vibrant ecosystem for start up but we have a real problem for scaling up. That is bringing your company to one hundred million to unicorn one billion. This is due to a number of reason some are cultural we have less risk capital in Europe we have not so many business essentials but we also have structural problems or financial market that less integrated so it's much more difficult to get big ticket investment for companies in Europe than it is in the United States. And that is why the Commission has put also as a priority the saving and investment union as a way to help the financing of the economy and support the scaling up of our enterprise. Otherwise we will keep on facing this very frustrating situation where we have plenty of good businessmen in Europe with innovative id and the minute their company is successful they cross the Atlantic for getting more financing.”
EU policy on custom fee on non-EU imports
- “Thank you. Yes. There was a question on digital taxation. Um, it's difficult to answer this question. You will understand, I'm sure. But, um, I will just mention that you have two Um, element that you need to keep clearly separate. On the one hand, president von der Leyen has mentioned a few weeks ago in the Financial Times the possibility to have a DST as a countermeasure. On the other hand, there is this question of digital levy as a possible own resource. The construction is not the same. By definition, a DST as a countermeasure is intended to target the country and the companies of the country against which you need to take countermeasures. A digital levy, if and when it is decided, would be constructed so as to be, as much as possible, non-discriminatory. The idea of a digital levy as a possible own resource is not a new idea. It has already been floated in 2021. You can even find a mention in European Council. Conclusion. There are many, many options that can be contemplated for own resources and for the time being. Everyone is still in brainstorming mode, so you have to be a bit patient until the summer to see what are the political choices which will be made as regards own resources.”
Own EU resources
- “Thank you Kira. I would take a more nuanced view actually than the two previous speakers. First as I explained I don't think there is a significant difference in terms of effective tax rate and all the studies show that they're sometimes a bit below, sometimes above. Second in terms of administrative workload the US system is even more complicated than ours. Now on the question of blending I'm not saying that blending does not matter but I think it matters for a different reason than the one you have stressed. I don't think it matters from a group point of view. Let me take a simplified example. Imagine a company which is present in two countries, equal activity in the two countries. A company subject to Pillar Two in those two countries is taxed at fifteen percent. A US company in one country it's a tax seven, no state, no city, eighty zero percent and the other country where it is it's taxed at thirty percent, it's in China. While in average both companies face fifteen percent so from a group point of view there is no difference from the fact that there is blending in the one case and no blending in the other case because in the US system if you're too present in a zero tax jurisdiction you end up having to pay a top up tax the same way that you would in Pillar Two where blending does matter and here I fully agree with Kimberly and content that is for creating an incentive together with the ETPR for the country to either introduce a corporate income tax or face a situation where someone else will tax anyway. So in doubt you'd better introduce what we call a QDMTT that is some form of taxation because there is no risk of trying in worst case scenario companies are moving but they would be moving anyway. Best case many will stay and you get some tax income that you get because of the lack of blending in Pillar Two and you don't get in the US system. So the OECD is more efficient in leveling the playing field but since we were talking of competitiveness and effect on the companies I would all the view that blending or not blending the effect is roughly the same.”
Tax Havens
- “Guilty. I think it's important to keep in mind that there never was a discussion on the United States fully implementing pillar two, even with the previous administration, the previous administration intended to keep guilty. So the discussion has always been about how to have the two working in parallel. And this is what we need to fine tune in in the coming weeks. As commissioner said on Monday, we want to do it while preserving the integrity of pillar two and also keeping in mind, like all jurisdictions, the need to keep to preserve the competitiveness of our companies. Important works remain to be done not only to fine tune the coexistence between Guilty and globe, but also, as Nadine was saying, to bring a simplification shock in the way we implement it. Part of this work is to be done within the OECD, and Manuel has mentioned the permanency of harbours. This is. A long awaited priority. We need to find a way to make it simpler for all the in scope, and making sure that there is not an excessive bureaucracy. When we know with a sufficient level of certainty that there will not be a tax liability at the end. So it's important not only for the man themselves to cut their red tape, but also for the tax administration that don't have to show a lot of data if there is no effect at the end. There will be also an EU ramification, not so much about the permanent safe harbour itself, but about pillar two in general.”
EU competences on taxation · Tax Havens
- “Thank you Pasquale. I'll start with a question of Massimo and Catasina. The issue of small parcels entering the market is indeed an important one. We receive around four point five billion parcels every year in the European Union and if my recollection is correct around ninety percent of them are small value parcels. So it is indeed a legitimate question of whether we should do something. In such a case the issue is being discussed. It is being discussed in at least two contexts. It is discussed as part of the discussion on customer union where there is the idea of a small tax on small parcels ending fees and it's being discussed also as part of the much broader discussion on new own resources for the union budget where it is also contemplated at the moment. On the question of Regina on the pass through, it is a difficult question undoubtedly. On the one hand clearly there is a pass through like for all taxes. It's difficult to find a tax for which you can't you don't have a pass through. The extent of the pass through depends on the competitive pressure on the market and also on the nature of the operation. So for instance for companies which are selling goods it's very easy to do a pass through and if my question is correct when Spain introduced the DST Amazon has announced that they would do a pass through. Now when you don't have a direct transaction and it's more the users' data which are taxed via the DST, doing the pass through is a bit more diluted because when you operate for instance making Google research your data may be used by European companies but also non European companies. So the pass through here is more global and it's very diff it's much more difficult to pinpoint where the pass through has taken place. I think you gave us one minute we'll stop there.”
Own EU resources · EU policy on custom fee on non-EU imports · Priorities of taxation policy in the EU
- “Thank you. Pasquale. Um, the pillar two is certainly a top priority for the European Union, but not only for us. Uh, we have to keep in mind that many countries have legislated actually, a bit more than what Nadine hinted at. Uh, we represent now more or less half of the number of countries which have legislated, Slated either for a full implementation of pillar two or for domestic top up tax. And even the most controversial today, part of pillar two are legislated by a vast number of jurisdictions like UK, like Canada, like New Zealand, like Australia, like Japan, like Korea. So obviously the discussions which are taking place is not a bilateral discussion between the United States and the European Union. It's a normal discussion within the OECD, which do involve an extremely high number of jurisdictions as far as the European Union is concerned. The recent adoption of DAC nine shows that we are not losing pace. The one and only purpose of DAC nine is implementing pillar two. And the fact that we got unanimity at a very quick pace shows that Member States are still fully committed to this purpose. Several speakers have mentioned the position expressed by the United States in in, in in the recent discussion. As far as the EU is concerned, we are fully willing to engage within the OECD to find a solution to better fine tune the way we take into account.”
Tax Havens · EU competences on taxation
- “It's effective around 13. In the US it's a little bit more complex than that. The other thing that we need to keep in mind is that there is a is a discussion in the United States on what to do with Gilti, and that is an element which is of key importance when determining what option we should realistically follow. The existing legislation normally was foreseeing that the effective tax rate of Gilti should increase to around 16 16.5%. There is a legislative proposal in the United States to, uh, prevent this increase to happen and to keep it at the current level, but the legislative process is just starting. Obviously, it's a proposal. We have to see what Congress will will decide and what will be the outcome at the end. Because the the US administration has an ambitious tax program. We have heard, for instance, their intention not to tax tips, etc. this has a cost. So we have to see how they will finance this. And maybe Gilti will be part of this equation. So for the time being, Pascal, I cannot answer your option in detail. This is far too soon. The discussion is just starting in the OECD, and there are elements that influence our final choice on what is acceptable and what is not acceptable, which are not known with certainty today. So for the time being, we have to do some wait and see. But we do this wait and see from a position where, as far as we are concerned, it is legislated.”
EU-US trade relations