EU to propose minimum tax legislation if G20 reaches agreement, Commissioner says – MNE Tax

By Doug Connolly, Multinational Corporate Taxation

The European Commission will propose legislation to implement an international agreement on a global minimum corporate tax to ensure its uniform application across the EU, according to comments of June 14 from European Commissioner for the Economy Paolo Gentiloni .

Speaking virtually at an event hosted by the Institute of International and European Affairs, an Irish think tank, Gentiloni added that a minimum tax deal would also require amending existing EU directives, including the anti- tax evasion.

Following the recent G7 agreement to achieve an overall minimum tax of at least 15%, attention will turn to the next meeting of G20 finance ministers in Venice on July 9-10. Negotiations on international tax changes are officially taking place at the G20 level, with the support of the OECD and in consultation with the 139 countries that make up the Inclusive Framework.

The EU will have the opportunity to contribute to discussions at the G20 level next month, and Gentiloni said the Commission is aware that its role is to “represent the common interest of all” the 27 EU member states. , large and small.

Gentiloni further acknowledged that some EU member states, including Ireland, are “wary” of changes. However, he suggested that a small open country like Ireland has “a lot to gain” from new international tax rules.

Successful negotiations at G20 level “will require compromises,” Gentiloni said.

EU member states lose 35-70 billion euros ($ 42-84 billion) each year to corporate tax evasion, according to Gentiloni. “Loopholes and mismatches between member states’ tax systems can leave opportunities open for aggressive tax planning, reducing the tax burden on some businesses to the detriment of other taxpayers. “

Regarding the “first pillar” of international tax negotiations on the reallocation of part of the taxing rights relating to multinational profits to market jurisdictions, Gentiloni said such an agreement should be implemented through a multilateral convention. However, the European Commission would also consider proposing a directive to ensure its uniform implementation across the EU.

Gentiloni underlined the importance of a comprehensive approach to tax reform and linked the global tax negotiations to the Commission’s new plan for a common corporate tax base in the EU. He said the new common corporate tax base plan “will build on global discussions.”

Europe needs to consider how its tax laws should evolve to protect tax revenues and ensure fairness, Gentiloni said. He added that this cannot be done “piecemeal” or “at EU level alone”.

Doug Connolly is editor-in-chief of MNE Tax. He has over 10 years of experience in tax legal developments, previously working with both a Big Four firm and a leading legal publisher. He holds a law degree from the American University Washington College of Law.