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Daniel Sarmiento
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5th March 2020
Consumer, Health & Environment Internal Market Tax

European Commission sets out priorities for EU taxation policy

In a speech today at the European Policy Center, Commissioner Paolo Gentiloni introduced the Commission’s priorities for EU taxation policy.

He stressed that taxation must be fully coherent with other policy areas, among which he highlighted Climate Change and the European Green Deal. According to Gentiloni, the revised Energy Tax Directive “must create a carbon price signal throughout the whole economy and serve as a complementary partner to the EU Emissions Trading System”.

In addition, the Commissioner added that the EU must ensure that its efforts are not undermined by less ambitious international partners. He stated that “Europe is proud to lead the way in the green revolution and hopeful that our example could be followed by other international players, but our businesses and workers should not pay the price if other countries lag behind.”

Therefore, he stated that the Commission will work to develop a carbon border adjustment mechanism, to address the risk of carbon leakage, and it will put a carbon price on imports, to deter polluting processes from shifting elsewhere and to prevent polluting products from flooding our market.

In regard to Europe’s digital sovereignty, the Commissioner openly addressed the need to introduce taxation among the EU’s priorities in its digital agenda.

Also, the European Commission will attempt to achieve a new framework for company taxation worldwide, to avoid the uncertainty and risks of double taxation. According to the Commissioner, the rules should reflect not the physical presence of a company but where value is really created in the digital age – namely, in interactions with users and their data – and allocate the taxable profits accordingly.

Gentiloni also stressed the need to improve the instruments to fight tax fraud. He announced a reassessment of the tools at EU level to regulate tax competition, starting with the Code of Conduct on Business Taxation, and simplifications to VAT compliance rules.

Read the full speech here.

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