EU Taxation & Compliance Bulletin 58

Printable Version

BEPS: OECD Publishes Responses to Country by Country Reporting Consultation:

The OECD has now published comments received in relation to a consultation document published in February inviting input concerning Action 13 of the Base Erosion and Profit Shifting Project, on Country-by-Country Reporting. The review is being carried out pursuant to the BEPS Action Plan, which mandated a review of CbCR under Action 13 in 2020.

The consultation document invited input on whether modifications should be implemented for Action 13 such that additional or different data should be reported, requesting practical experiences and issues with reporting requirements under Action 13, input on the use of the reported data by tax administrations, and on the effectiveness and appropriateness of thresholds and reporting.

UK to Proceed with Digital Tax:

The UK budget delivered last month confirmed that the UK is proceeding with plans to introduce a digital services tax, which will enter into force in April 2020, notwithstanding US President Trump’s administration reportedly having advised the UK government at multiple levels that no free trade deal will be agreed should the tax be passed into law.

The tax will apply to businesses making search engines, social media platforms or online marketplaces available to UK users, including any associated online advertising of that business, which have a global annual turnover over £500 million pounds and over £25 million pounds of turnover attributable to revenue derived from UK users. The tax will apply at a rate of 2% to revenue over £25 million pounds.

EU Publishes Industrial Policy Package:

On 10 March 2020, the EU Commission presented its Industrial Strategy, which aims to advance EU competitiveness through the implementation of a range of measures, notably including:

  • A review of competition rules and State aid guidelines;
  • An EU single market strategy; 
  • A White Paper concerning distortive effects by foreign subsidies; 
  • Measures to decarbonise energy-intensive industries, improve carbon leakage tools and the supply of low-carbon energy at competitive prices;
  • A Circular Economy Action Plan; and
  • A new SME strategy.

EU Survey: Implementation of new reporting rules for EU payment services providers to fight VAT fraud:

On 18 February 2020, the EU Council adopted a legislative package relating to the transmission and exchange of payment data in order to improve the fight against e-commerce VAT Fraud.

This legislative package creates new reporting obligations for EU payment service providers, which will require them to transmit data on the payee of cross-border payments to the tax authorities. The legislation specifies the payment service providers and the type of payment services which will be subject to this reporting obligation.

EU Approves Temporary State Aid Framework:

The European Commission last week adopted a Temporary Framework concerning State aid measures to assist Member States in dealing with the economic impact of the COVID-19 outbreak.

To minimise the economic impact of the COVID-19 outbreak, the Framework allows Member States to provide aid by: providing grants, selective tax advantages, and advance payments of up to 800,000 Euro; providing State guarantees for loans taken by businesses; subsidising public loans to companies, putting in place safeguards for banks providing State aid to the economy; and providing short-term export credit insurance.

OECD COVID-19 Tax Policy Response Recommendations:

The OECD has created a webpage concerning COVID-19 outbreak, providing information and country profiles on the spread of the virus, and recommended policy responses concerning a variety of areas.

In relation to tax policy responses, the OECD sets out various recommended measures, including, amongst other measures, more generous welfare and income support payments, deferral or waiver of employer and self-employed social security contributions, tax concessions for those working in health and emergency services, deferral of VAT and custom duties payments, expediting the payment of refunds, deferring or waiving taxes, or increasing loss carry-forward provision.

EU Plans to Introduce AML Regulation:

The European Commission is reportedly planning to introduce an EU Regulation to further plans under its Roadmap published in February concerning future steps in its “new comprehensive approach to preventing and combating money laundering and terrorism financing”.

The Commission states in the Roadmap that “more harmonisation at EU level, and possibly central EU mechanisms/bodies to strengthen the preventive framework in light of the cross-border nature of much money laundering in the EU and of the integration of the internal market.” are needed. Introducing an EU Regulation would arguably assist in a more streamlined approach across the EU to money-laundering prevention. A policy communication will be issued in the coming months setting out the areas where further EU action will be taken. Extensive consultation with stakeholders will also take place in 2020, with a view to present new policy initiatives in early 2021.


Source: Malta Institute of Taxation Click here and CFE Tax Advisors Europe Click Here

Please contact David Marinelli should you wish to discuss any matter relating to your Malta registered company.