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By Linda A. Thompson
The European Commission says it wants to fight tax avoidance among large companies, but its motives amount to a power grab, a former OECD official said.
The work on the OECD’s base erosion and profit shifting action plan has been completed, said Marlies de Ruiter, the former head of the OECD’s tax treaties and transfer pricing division. Now, the competition authority’s most recent proposals are aimed at filling its own coffers, she said.
“This isn’t at all about BEPS anymore. Tax avoidance has been addressed; the measures have been taken,” said de Ruiter, now a partner at EY.
A commission spokeswoman said the EU needs to lead the field in designing tax laws for the digital age.
“Work towards new tax laws for the digital economy is complex, politically sensitive and technically difficult,” the spokeswoman said. “We fully support efforts to reach a global solution at the level of the OECD, but we’re also realistic about the fact that this will take time.”
The commission remains convinced “that a common EU position can be found: if not, we face the real risk of member states going their own way and adopting patchwork solutions, which will distort the single market.”
The pending common consolidated corporate tax base (CCCTB), which would allow large companies to file one tax return for all of their business operations within the bloc, and the proposed 3 percent digital transaction tax are examples of how European lawmakers are using the anti-tax avoidance message to push their own agendas through, she said at a June 21 conference organized by the Dutch Association of Tax Advisers.
European Taxation Commissioner Pierre Moscovici has previously said the proposed tax on digital companies, aimed at giants like Amazon.com Inc. and Alphabet Inc.'s Google, could stem a budget hole that is projected for when U.K. leaves the bloc. The tax could ease the gap by as much as 10 to 11 billion euros ($12.7 billion), he said last month.
Hans van den Hurk, an independent international tax and strategy specialist, added that Moscovici wants to reach an agreement on the CCCTB proposal before the end of the year.
“When you talk to Moscovici, all he talks about is fair taxation, fair taxation,” he said during one of the panel debates.
He noted Moscovici was mum about a recent report from the United Nations Conference on Trade and Development saying the commission’s plans will harm developing countries.
“When you mention that to him, he doesn’t say anything,” he said. “This is simply about power, and about more money for Brussels.”
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