Britain, Europe and Tax Competition 1 June 2015 RICS, 12 Great George Street, London, SW1P 3AD
As the G20-BEPS project draws to its conclusion after a two year study, the EU is planning to play a more central role in European business tax policy. There has been action on the automatic exchange of information, changes to the Parent-Subsidiary Directive, new anti-abuse provisions and state aid investigations into tax rulings. The Commissioner in charge of tax, Pierre Moscovici, has recently put the CCCTB back on the table, declaring that “we need action to make it happen”. The German, French and Italian finance ministers have urged the European Commission to draw up EU-wide laws to curb corporate tax avoidance and prevent member states from offering lower taxes to attract investors. The UK has been active independently – introducing the Diverted Profits Tax, and agreeing to reform the Patent Box.
These activities raise a number of issues. What are the most important plans for the EU? How do they relate to proposals likely to emerge from the OECD? And conversely, are OECD BEPS proposals commensurate with EU law and policy? How far, and in what ways, do member states continue to compete with each other? Are some forms of competition fairer than others? And in the focus on combating tax avoidance, what about the effects of corporation tax on investment and economic growth?
The conference included presentations of related ETPF-supported academic research, on the impact of corporation tax on growth, and on the potential conflict between OECD BEPS proposals and EU law. The ETPF has also recently commissioned four policy-oriented papers that attempt to summarise academic research on important policy issues. The first two policy papers were on the incidence of corporation tax and the evidence for base erosion and profit shifting, and two new papers were presented at the conference: on tax competition and on the effects of taxation on flows of foreign direct investment.