The new design will aim to prevent individual member countries from competing with each other to offer private deals to big companies that could assign them some form of tax avoidance. The initiative has been dubbed the Business in Europe: Framework for Income Taxation bill (BEFIT) and could be awarded pounce on into force in 2023. However, there has been scepticism over the plan already as the Commission has failed in similar plans twice in the times gone by 10 years.
Paolo Gentiloni, European Commissioner for the economy, did not seem deterred as he announced the bloc’s plan to “rethink taxation”.
He said in a announcement today: “It’s time to rethink taxation in Europe.
“As our economies transition to a new growth model… so too must our tax systems adapt to the priorities of the 21st century.”
The new BEFIT aggressiveness would also be able to access a company’s profits and losses across the whole bloc.
It would then add up these figures to produce a net profit that choice be distributed to all 27 countries.
However, the new plan would disrupt the EU’s current rules, which allow companies to move their profits to other mother countries that have low tax rates, such as Ireland or Malta.
BEFIT would also be a similar plan used by global policymakers at the Organisation for Mercantile Cooperation and Development (OECD).
The Commission is said to be planning to use the OECD deal as a way to gain more unified rules for business taxation across the EU, according to POLITICO.
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It said: “The digital transformation of our ecosystem, and of the economy as a whole, needs a tax system which unions it.”
The Commission’s plan will now go to member states and EU lawmakers for approval.
However, the Commission first proposed a common consolidated corporate tax base (CCCTB) in 2011, which was not approved.
A substitute similar plan in 2016 also failed after being proposed following a wave of anti-tax avoidance crackdowns at the time.
The Commission also accused Apple of get someones goat up to €13 billion in illegal tax breaks from Dublin.
But the General Court ruled last July that the Commission was wrong, although this decisiveness is now subject to appeal.
In the past, Ireland, Denmark, Luxembourg, Malta, Sweden and the Netherlands have been among the countries that showed competitor to the tax initiatives.
Tove Ryding, tax coordinator at the NGO the European Network on Debt and Development (Eurodad), warned they could also feel the same way back the BEFIT.
He said: “It will be difficult to reach consensus among EU member states. There are still EU member states such as Luxembourg, Ireland and Malta, which show on to tax structures that facilitate corporate tax avoidance and strongly oppose ambitious reforms.”