Local view for "http://purl.org/linkedpolitics/eu/plenary/2010-02-08-Speech-1-084"
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"en.20100208.14.1-084"2
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"Mr President, honourable Members, it is my pleasure to discuss tax matters with you today, the last day of my mandate as Commissioner responsible for taxation and customs.
In relation to the number – which is 12 – of tax information exchange agreements for a country to conclude for achieving the status of a cooperating jurisdiction, the Commission supports the need to review it and to take qualitative aspects into account such as, firstly, the jurisdictions with which the agreements have been signed. To be explicitly clear, a tax haven which has 12 agreements with other tax havens would certainly not pass the threshold. Secondly, the willingness of a jurisdiction to continue to sign agreements even after it has reached this threshold and thirdly, the effectiveness of implementation.
As regards your request to examine a range of options for sanctions and incentives to promote good tax governance in tax matters, the Commission is already examining a range of incentives to promote good governance at EU level, for example, the enhanced use of development aid in order to encourage certain third countries to move away from unfair tax competition. Work on possible sanctions is less advanced and, of course, any EU action must take into account individual Member States’ tax policies.
There are, however, two specific areas where I do not entirely agree with you. One relates to the public registries and disclosure of information concerning investors in tax havens. I think a balance must be established between privacy and the need for jurisdictions to enforce their tax laws.
While there should be no restrictions on exchange on the basis of bank secrecy or domestic tax interest requirements, respect for taxpayers’ rights and strict confidentiality of information exchanged must apply. These limits have to be respected, so a public register may not be the best solution.
The other concern is transfer pricing. You propose shifting to the comparable profit methods in order to better identify inaccurate transaction prices and the most frequently applied tax-evasion techniques. In my view, while it is true that a comparison of industry sector profits may be an indicator that something is amiss, that single indicator alone is not sufficient to conclusively identify inappropriate transfer pricing and could only be one factor in a much wider risk assessment of the accuracy of prices charged on transactions between subsidiaries of a multinational company.
The comparative profit method is acceptable but only if it arrives at the same result as the transactional methods. Going straight to the comparative profit method – as the amendment seems to suggest – would not necessarily give us the ‘right’ arms-length answer.
The proposed new directive on administrative cooperation in the field of taxation seeks to enhance and streamline all mechanisms of exchange of information and other forms of cooperation between the Member States to better prevent tax fraud and tax evasion. In particular, the directive proposes to withdraw bank secrecy in the relations between Member States for administrative cooperation purposes. I warmly welcome the constructive attitude and support for this proposal shown in the report by Mrs Alvarez.
I am aware that the most controversial point of the discussion in the committees has been the amendments on automatic exchange of information aimed at rendering the use of automatic exchange optional only, based on a decision to be taken by the Member States.
Let me recall that the objective of this proposal is to enhance within the EU all types of exchange of information and other forms of administrative cooperation and specifically automatic exchange, which is a major pillar for preventing tax fraud and tax evasion.
Promoting the exchange of information on request, as an OECD standard, is certainly an acceptable approach with third countries but, in a fully integrated internal market as the EU single market is, Member States must be more ambitious and go further. They must be able to use the best instruments at their disposal to achieve their political objectives of fighting tax fraud and evasion.
I would like to express my thanks first of all to the European Parliament, and especially to the Committee on Economic and Monetary Affairs, for the support the Commission and I have received during the last five years for most, if not all, the tax proposals we presented.
I notice that the draft report on good tax governance highlights the necessity to develop the automatic exchange of information as a general rule, as a means of putting an end to the use of artificial legal persons to avoid taxation. I also notice that the report welcomes this proposal for a new directive for administrative cooperation as it also extends its scope to cover taxes of any kind and it abolishes bank secrecy. I therefore call on you not to vote in favour of the new amendment tabled by the PPE Group to erase any reference to automatic exchange of information in the report.
Concerning the amendments aimed at providing for more defined rules on the protection of private data, I would like to underline that in any case, Member States are compelled to respect the existing Community legislation on this subject and that therefore, these rules will have to be respected without any further amendment of the present draft directive. However, for the sake of clarity, I could envisage a general recital referring to the existing Community rules.
As regards the amendments on the evaluation system and requirements, I believe that the rules foreseen in the proposal and reinforced in the Presidency compromise text should provide for an adequate framework, reflecting the spirit of the proposed amendments.
The Commission can accept, in principle, certain amendments, such as those introducing the possibility of the Commission adopting delegated acts in respect of technical improvements to the categories of income and capital that are subject to the automatic exchange of information, while the categories concerned should be defined in the directive itself and not through comitology. This is also in line with the orientation of the ongoing Council discussions.
The Commission can also accept in principle the amendments on bank secrecy, which would not distinguish between taxpayers based on their tax residency. Furthermore, the Commission also accepts in principle the amendments on the presence and participation of officers in administrative inquiries.
The Commission will defend the spirit of these amendments in the Council deliberations, without formally amending its proposal, as these provisions seem to be already reflected in the compromise text.
Let me now turn to the Commission’s proposal on mutual assistance for the recovery of taxes. National provisions on tax recovery are limited in scope to national territories, and fraudsters have taken advantage of this to organise insolvencies in Member States where they have debts. Member States therefore increasingly request the assistance of other Member States to recover taxes, but existing provisions have only allowed 5% of debts to be recovered.
The Commission’s proposal is intended to provide for an improved assistance system, with rules that are easier to apply and provide for more flexible conditions for requesting assistance. As you know, ECOFIN reached an agreement on 19 January 2010 on a general approach to the draft directive. I very much welcome the supporting attitude to this proposal shown in the report by Mr Stolojan.
The Commission can accept, in principle, the amendment to make the exercise of inspection powers in the requested Member State by officials of the applicant Member State subject to an agreement between the Member States concerned. This is also reflected in the Council compromise text. However, the Commission cannot accept other amendments, such as introducing systematic and automatic exchange of information in the area of recovery, because it could lead to a disproportionate administrative burden, as it would also cover unproblematic recovery situations. Nevertheless, the Commission, in cooperation with the Member States, will examine the possibilities of how to further improve tax recovery assistance and address the eventual problems.
Let me finally conclude with a few words on the Commission’s proposal for an optional and temporary application of the reverse charge. In responding quickly to new and worrying fraud patterns reported by several Member States, the objective of this proposal is to give interested Member States the possibility, under an optional and temporary scheme, to apply the so-called reverse charge mechanism, under which it is the client who has to account for the VAT to a limited number of highly fraud-sensitive sectors. Under the proposed directive, Member States would be able to choose a maximum of two categories of particularly fraud-sensitive goods, such as mobile phones, and one category of services such as greenhouse gas emission allowances, on which major fraud circuits have been detected over the last summer out of a list of five categories.
The tax policy issues you are currently discussing have a major role in order to achieve the Commission’s objective to better tackle tax fraud and evasion which results in the loss of EUR 200 billion to EUR 250 billion a year at EU level. We are also aiming to increase transparency and cooperation.
They would need to assess the effectiveness of this measure, as well as its impact on a possible shift of fraud to other Member States, to other types of supplies and other fraud patterns.
I was pleased that the Council took up this proposal so quickly and reached agreement on it at the ECOFIN of 2 December. Of course, it is regrettable that an agreement could only be reached on one part of the proposal – on greenhouse gas emission allowances – but I am fully aware of the fact that this part was the one where the most urgent reaction was needed.
The Commission will continue to contribute to the Council negotiations on the remaining parts of the proposal as constructively as possible.
Finally, I would like to thank the European Parliament once again for its speedy reaction as well as for its clear support. Even though the Commission is not in the position now to formally accept all the proposed amendments, they will provide us with a useful input into the forthcoming Council debates. What is at stake is indeed our capacity to react quickly to a massive fraud mechanism, but also the credibility of the EU emission-trading system.
I would like to express my special thanks to Mr Domenici, Mrs Alvarez, Mr Stolojan and Mr Casa for dealing with these tax initiatives in a constructive manner. I am very pleased that the essential message of the reports is one of support for the Commission’s initiatives. I understand that the reports encourage increased efforts concerning, firstly, good governance in tax matters, both in the European Union and beyond; secondly, administrative cooperation in the tax area; thirdly, mutual assistance in the recovery of tax claims; and, fourthly, the fight against VAT fraud, in particular, carousel fraud.
Concerning good governance in tax matters, the Commission’s policy is aimed at promoting the principles of transparency, the exchange of information and fair tax competition on a global scale. The Commission adopted the communication in April 2009, promoting these principles in order to combat cross-border tax fraud and evasion, both within the EU and beyond, and to achieve a level playing field.
The Commission has tabled several proposals in order to improve good governance within the EU. The debate is ongoing on these proposals, but I hope that they will be adopted soon and that it will reinforce our arguments vis-à-vis other jurisdictions to take similar steps.
The Commission strongly believes that the deepening of economic relations between the EU and its partner jurisdictions should always be accompanied by commitments to good governance principles. Based on the 2008 Council conclusions, the objective is to introduce in relevant agreements with third countries a provision on the basis of which EU partners would recognise and commit themselves to implement the principles of good governance in the tax area.
Particular attention needs to be paid to developing countries. The Commission services are currently preparing a Communication which would be dedicated to good governance in tax matters in the specific context of development cooperation. This communication will address what role good governance in tax matters can play in improving resources mobilisation in developing countries, notably through capacity building.
I welcome your support to fully associate the Commission in the works of the OECD Global Forum peer review exercise, in particular, with regard to the identification of non-cooperative jurisdictions, the development of a process for evaluating compliance and the implementation of measures to promote adherence to the standards. The European Commission should continue to be an active player to ensure that all partners live up to their commitments."@en1
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