Will Morris, Chair, Tax Committee, AmCham EU, said: ‘After several years of negotiations, the agreement is a significant political achievement for international leaders. The deal is another important step towards creating a global tax system fit for the 21st century and demonstrates that multilateralism works. The framework also helpfully pauses the introduction of new unilateral measures.’ He went on to say: ‘However, parties, including the EU, should focus on the implementation of the deal. A lot of hard technical work still remains in order to put a system in place that is consistent across jurisdictions. Reducing complexity will be critical to the success of the new framework. Companies will also require sufficient time and a simplified compliance mechanism to adapt to the new rules. AmCham EU stands ready to provide detailed technical input and support to help achieve these goals.’
G20: international tax deal shows multilateralism works
On Wednesday, 13 October, G20 Finance Ministers endorsed the political agreement reached last week by 136 countries to reform the international corporate tax framework. The American Chamber of Commerce to the EU (AmCham EU) generally supports the OECD Inclusive Framework deal, but urges further detailed work in order to ensure that the agreement succeeds in stabilising the international tax system and addressing challenges arising from the digitalisation of the global economy.
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Closing the gap between customs and VAT rules
The reform of the Union Customs Code changes who is treated as the ‘importer’ when a non-EU company uses an indirect customs representative. That creates a problem under the EU VAT Directive, which links import VAT deduction to being identified as the importer or consignee. In practice, the non-EU company may no longer meet that requirement, while the customs representative may not qualify for the deduction either.
That could leave import VAT irrecoverable and create uncertainty for businesses using established import models. The Commission should ensure that the non-EU principal can still be identified in customs data for VAT purposes and fix the mismatch between the UCC and the VAT Directive.
Learn more about what changes are needed to keep import VAT deductibility workable under the new customs framework.
Principles for economically efficient and growth-compatible tax reform in the EU
The Draghi report highlights how economic growth has stagnated in the EU due to structural weaknesses that risk undermining the EU’s global competitiveness. To bolster the EU’s attractiveness and competitiveness, lawmakers should pursue a coherent pro-growth tax reform agenda. A pro-growth tax reform agenda in the EU27 can be evaluated through five principles: (a) economic efficiency, including low distortion of economic decisions and low administrative and compliance costs; (b) consideration and strong discipline across the entire lifecycle of tax policy reform: initial decision making process, legal design and implementation; (c) evidence-based accountability through clear objectives, rigorous impact assessment, meaningful consultation and ex post review; (d) strengthening the Single Market rather than adding cross-border frictions; and (e) neutrality and fair competitive conditions across sectors, countries and business models.
These principles are mutually reinforcing: growth is supported not only by sound and coherent statutory design, but by the full tax system including law, administration and taxpayer interaction. AmCham EU has prepared a framework for EU lawmakers to use while designing, implementing and evaluating tax policy based upon our members’ experiences operating in every EU Member State and almost every country around the world.
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