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On July 6, 2016, the European Parliament (EP) voted in plenary session on the report prepared by the Special Committee on Tax Rulings and Other Measures Similar in Nature or Effect (TAXE2). The report, which was adopted by 514 votes to 68, with 125 abstentions, contains recommendations to make corporate taxation fairer and clearer and to tackle tax evasion and aggressive tax planning.
The TAXE2 Committee is the second temporary group set up by the EP with the mandate to investigate EU Member States’ tax ruling practices, examine ways to end unfair tax competition and combat tax evasion within the EU. After an initial 10-month mandate, the firs5 TAXE Committee published a final report in November 2015 and acknowledged that its work should be continued, especially as regards the alleged role of banks and intermediaries in facilitating aggressive tax planning and on uncooperative jurisdictions. As a consequence, the TAXE2 Committee was created on December 2, 2015, for an initial 6-month mandate, which was further extended until August 2016. The focus of the TAXE2 Committee was on harmful corporate tax regimes and practices at the European and international level.
The TAXE2 report includes a number of recommendations to the Member States and the EU Commission regarding current and future legislative proposals, inter alia:
While welcoming most of the initiatives and legislative proposals put forward by the EU Commission, the report also comments on a number of their weaknesses. The Committee particularly regrets that the initial proposal for an Anti-Tax Avoidance Directive has been diluted, e.g. on the interest deduction and controlled foreign company rules, and that earlier recommendations by the EP have not been included in the EU Commission’s proposal for public country-by-country reporting and the final text on the automatic exchange of tax rulings.
Finally, the Committee urges the EU Commission to come forward with a proposal on CCCTB before the end of 2016, and to present concrete legislation on transfer pricing issues, insisting on the need to provide clarifying guidelines as regards their interaction with State aid.
This report should be seen as complementing the report issued by the TAXE Committee in November 2015 and aims at following-up the work that could not be completed by its predecessor. Although most of the proposed recommendations have already been considered in other work undertaken by the EP, this report is yet another indication of the increasing pressure the EP is putting on other European institutions with respect to countering aggressive tax planning and promoting tax transparency. This is also evidenced by the proposals put forward by the EU Commission on July 5, 2016 (see ETF 292) on anti-money laundering requirements and beneficial owners registers.