Activities of Damien CARÊME related to 2021/2010(INI)
Plenary speeches (1)
Digital taxation: OECD negotiations, tax residency of digital companies and a possible European Digital Tax (debate)
Shadow reports (1)
REPORT on digital taxation: OECD negotiations, tax residency of digital companies and a possible European Digital Tax
Amendments (34)
Amendment 13 #
Motion for a resolution
Citation 16 a (new)
Citation 16 a (new)
— having regard for the ongoing work of the United Nations Committee of Experts on International Cooperation in Tax Matters on the Tax Challenges Related to the Digitalization of the Economy,
Amendment 19 #
Motion for a resolution
Recital A a (new)
Recital A a (new)
A a. whereas the current mechanisms of international corporate tax such as transfer pricing and the arm’s length principle are flawed, the digitalizing economy has exacerbated the problems already existing through an over-reliance by multinational companies on intangibles such as intellectual property;
Amendment 20 #
Motion for a resolution
Recital A b (new)
Recital A b (new)
A b. whereas on average, in the EU, digital businesses face an effective tax rate of only 9.5%, compared to 23.2% for traditional business models; (1) (1) Source: Computations from the Impact Assessment of the European Commission, based on ZEW (2016, 2017) and ZEW et al. (2017).
Amendment 22 #
Motion for a resolution
Recital C
Recital C
C. whereas the BEPS Action Plan has not succeeded in establishing asufficient global consensus on mimportanyt issues in order to fight tax evasion, aggressive tax planning and tax avoidance; whereas, however, there was no agreement in the past on addressing the tax challenges arising from the digitalisation of the economy, which led to the adoption of the separate BEPS Action 1 – 2015 Final Report; whereas over 100 non-OECD countries were not invited when BEPS Action Plan was negotiated and adopted, illustrating the lack of inclusiveness of the OECD process;
Amendment 27 #
Motion for a resolution
Recital E
Recital E
E. whereas the Commission has put forward two proposals on the taxation of the digital economy in 2018, including a short-term solution introducing a digital services tax (DST), and a long-term solution defining a significant digital presence (SDP) as a nexus for corporate taxation which should replace the DST; whereas Parliament supported all these proposals, but they were not adopted in the Council because Member Stahave been all blocked at Council level due to the fact that taxation matters could not reach the unanimous agreement needed in the realm of taxation at EU levelstill fall under the unanimity rule; whereas other important proposals are blocked such as the proposal for a Council Directive on a common consolidated corporate tax base (CCCTB);
Amendment 34 #
Motion for a resolution
Recital H
Recital H
H. whereas the lockdowns in response to the COVID-19 pandemic have accelerated the transition to an economy based on digital services, putting physical businesses at a further disadvantage ; whereas such companies are making excess profits on the back of traditional businesses and such profits are not being adequately taxed; whereas there is an urgent need to act swiftly, taking into account the aim of the G20/OECD IF to conclude its negotiations in July 2021; whereas the initial deadline of end 2020 has already been missed;
Amendment 40 #
Motion for a resolution
Recital I a (new)
Recital I a (new)
I a. whereas Member States should closely collaborate and take a united, strong and ambitious position in international tax negotiations, the idea of competing through offering a lower tax environment being outdated and dangerous;
Amendment 43 #
Motion for a resolution
Recital I b (new)
Recital I b (new)
I b. whereas the Interinstitutional Agreement on budgetary cooperation of 16 December 2020 (IIA) refers to a legally binding commitment towards the introduction of an EU digital levy as an own resource by 1 January 2023;
Amendment 45 #
Motion for a resolution
Recital I c (new)
Recital I c (new)
I c. whereas the OECD-led negotiations will be heavily discussed over the next months; whereas the Council Conclusions of 27 November state that the European Council will "assess the situation regarding the work on the important issue of digital taxation" in March 2021; whereas G20 Finance Ministers will meet on 7-8 April 2021 and 9-10 July 2021 and take stock of the negotiations of the Inclusive Framework on both Pillars of the international negotiations;
Amendment 49 #
Motion for a resolution
Paragraph 1
Paragraph 1
1. Notes that the current rules date back to the early 20th century, and are mainly based on physical presence; points out that digitalisedation has greatly increased the ability of companies canto engage in significant business activities in a jurisdiction without physical presence there, and therefore taxes paid in one jurisdiction no longer reflect the value and profits created there; regretwarns that there is a much broader issue of profit misalignment by multinational companies, also less digitalized ones, facilitated by the current international tax rules; deplores that the traditional concept of permanent establishment fails to cover the new aspects of digital businesseshas become outdated for the 21st century, and underlines the need to define virtualfor a wider definition of permanent establishment; stresses that users of online platforms and consumers of digital services are now central features in value creation by highly digitalized businesses and cannot be shifted outside a jurisdiction in the same way as capital and labour, and should therefore be the basis for the definition of a new tax nexus in order to provide an effective remedy against aggressive planning; warns against a narrow definition of the problems at stake that would result in designing targeted rules for certain businesses only;
Amendment 60 #
Motion for a resolution
Paragraph 2
Paragraph 2
2. Regrets the shortcomings of the international tax system, which is unfit for properly addressing the challenges of globalisation and digitalisation; calls for an international agreement aiming for a fair and effective tax system; calls for a deep reform of the tax system as a whole that is largely flawed, in particular due to the transfer pricing fiction that enables tax fraud and tax avoidance; highlights the need to tax multinational corporations on the basis of their global consolidated profits instead, treating corporate groups as single entities for tax purposes, with taxing rights being allocated between countries based on a fair and effective formula; recalls that the Commission proposal on a common consolidated corporate tax base (CCCTB) aims to introduce such a system within the EU; deplores the fact that the Member States were not able to agree on this proposal yet; calls on the Council to swiftly adopt the CCTB and CCCTB proposals;
Amendment 72 #
Motion for a resolution
Paragraph 3
Paragraph 3
3. Highlights the need to address the under-taxation of the digital economy, while ensuring a fair distribution of taxing rights among all countries where thelarge companies, in particular highly digitalized businesses, while solving the current and recurrent profit misalignment by companies and allowing a fair distribution of taxing rights among all countries, in particular those with little multinational companies resident, where the economic activity and value creation of multinational digital companies takes place;
Amendment 87 #
Motion for a resolution
Paragraph 4
Paragraph 4
4. Notes that on average digital business models face significantly lower effective tax rates than traditional business models which rely on physical presence; recalls that on average, digital businesses face an effective tax rate of only 9.5%, compared to 23.2% for traditional business models; regrets that tax avoidance linked to aggressive tax planning is not only detrimental to the collection of public revenues but also puts businesses, especially SMEs, at a disadvantage, while creating barriers for new local entrants;
Amendment 95 #
Motion for a resolution
Paragraph 5
Paragraph 5
5. Welcomes the efforts in the G20/OECD IF to reach a global consensus on a multilateral reform of the international tax system to address the challenges of the digitalised economy; acknowledges the progress of discussions on the proposals at technical level, despite the delays caused by the COVID-19 pandemic, but deplores that the initial deadline of end 2020 for the international agreement was not met, and calls for a swift agreement by mid- 2021; highlights the value of the G20/OECD IF forneed for a negotiating process as inclusive as possible in order to guaranteeing multilateral solutions and finding support at the global and EU levelglobal level; is concerned that the current design of Pillar 1 and Pillar 2 do not reflect the interests of developing countries; warns that there is still no level playing field and full inclusion of non- OECD countries in particular low-income countries; calls on EU Member States to also actively engage on tax issues in other international fora such as the UN;
Amendment 100 #
Motion for a resolution
Paragraph 5 a (new)
Paragraph 5 a (new)
5 a. Reiterates the Parliament’s support for the creation of an intergovernmental tax body within the framework of the UN, which should be well equipped and have sufficient resources and, where appropriate, enforcement powers, and would ensure that all countries can participate on an equal footing in the formulation and reform of a global tax agenda;[1] [1] Recital 341, European Parliament resolution of 26 March 2019 on financial crimes, tax evasion and tax avoidance (2018/2121(INI)), https://www.europarl.europa.eu/doceo/doc ument/TA-8-2019-0240_EN.html
Amendment 103 #
Motion for a resolution
Paragraph 6
Paragraph 6
6. Welcomes the fact that the two pillar approach suggested in the G20/OECD IF does not ring fence the digital economy but seeks a comprehensive solution to the new challenges of the digitalized economy; acknowledges that both pillars are complementary, and supports a holistic solution in which one pillar is not adopted without the otherwhere both pillars are implemented; deplores that most Member States have been pushing to focus solely on taxing highly digitalized companies leaving out the broader issues of the international tax system; considers that a lack of agreement on Pillar 1 should not discourage consensus and agreement on Pillar 2;
Amendment 108 #
Motion for a resolution
Paragraph 7
Paragraph 7
7. Welcomes the proposal underOECD’s secretariats efforts in finding a solution on how to adapt our current international tax rules to a globalizing and digitalizing economy; ; welcomes the core idea of Pillar One ofto create a new tax nexus and new taxing rights which would create the possibility of taxing multinational enterprises (MNEs) in market jurisdictions, even where they have no physical presence based on their economic activity; regrets however that the limited and overly complex proposals under Pillar One are at the moment not reflecting this idea sufficiently; underlines that the interaction with users and consumers significantly contributes to value creation in digital business models, and should therefore be taken into account when allocating taxing rights; stresses that the scope of these new taxing rights should cover all large MNEs which could engage in BEPS practices, while not creating further and unnecessary burdens on SMEs; is concerned however that the current Pillar One proposal would actually increase the complexity of the international tax system, making it resource-demanding and challenging to administer; is concerned that an overly complex system could actually add opportunities to circumvent the newly agreed rules; calls therefore on a re- design of current taxing rights in a way that is not adding more complexity, but rather is easy to administer and implement by all countries, and comprehensive enough to represent a transformative change in the current status quo; invites, in order to deliver the initial objectives of Pillar One, to reconsider the proposal towards simpler and more ambitious rules, as well as a lower revenue threshold;
Amendment 113 #
Motion for a resolution
Paragraph 7 a (new)
Paragraph 7 a (new)
7 a. Regrets the focus on automated digital services or consumer facing businesses only in the Pillar One proposal as it stands; deplores the role Member States have played in this; considers that the scope of the reform should not only cover highly digital or consumer facing businesses but cover all large firms having the possibility to engage in BEPS practices by exploiting the current international tax frameworks; notes that a too restrictive approach severely undermines the fairness and effectiveness of the proposal; in this regard calls on Member States to push for a high allocation percentage and fair and equal allocation of profits and to drop the delineation between routine and non- routine profits;
Amendment 116 #
Motion for a resolution
Paragraph 7 b (new)
Paragraph 7 b (new)
7 b. Observes that the negotiations under Pillar One might conclude with a limited scope, targeting solely highly digitalized businesses in order to reach a simpler agreement within the limited timeframe; insists that in the event of such outcome, the EU should within the G20 push for a renewed mandate for the OECD to immediately launch a new process to fundamentally revise the flawed international tax system and completely depart from the arm’s length principle for all the large companies; points out that such process could be jointly organized with the UN Tax Committee; emphasises that such process should lead to a fairer distribution of taxing rights among countries;
Amendment 118 #
Motion for a resolution
Paragraph 7 c (new)
Paragraph 7 c (new)
7 c. considers that any minimum rate under Pillar Two should be set at a fair and sufficient level - of at least 20% - in order to effectively discourage profit shifting and prevent damaging tax competition;notes the Independent Commission for the Reform of International Corporate Taxation has even recommended a rate of 25%[1];raises concerns that a low threshold such as 12,5% would likely lead to a global race to the bottom towards this minimum floor for corporate taxation by most countries, which would be damaging for all in the end;calls on the Commission to swiftly put forward a proposal for a minimum corporate effective tax rate at EU level, independently of progress made at international level;deplores that the OECD had to resort to carve-outs which weakens the impact of Pillar Two;however takes note of the compromise found to embed formulaic based substance rules in the minimum tax design and calls on the OECD and Member States to extend this idea to the allocation of the minimum tax rights in order to stop the current artificial and highly unequal separation between resident and source countries; [1] Independent Commission for the Reform of International Corporate Taxation, INTERNATIONAL CORPORATE TAX REFORM: Towards a fair and comprehensive solution, 2019, https://static1.squarespace.com/static/5a0 c602bf43b5594845abb81/t/5d979e6dc5f7c b7b66842c49/1570217588721/ICRICT- INTERNATIONAL+CORPORATE+TAX +REFORM.pdf
Amendment 127 #
Motion for a resolution
Paragraph 8
Paragraph 8
8. Calls on the Commission and the Council to intensify the dialogue with the new US administration on digital tax policy with the aim of finding a common approach in the framework of the G20/OECD IF negotiations before June 2021; calls on the Council to oppose the ‘safe harbour’ clause, proposed by the US administration, which seriously risks undermining the reform efforts;
Amendment 134 #
Motion for a resolution
Paragraph 9
Paragraph 9
9. WelcomNotes the proposal of a dispute prevention and resolution mechanism but underlines that tax certainty is best achieved by establishing simple, clear and harmonised rules that prevent disputes in the first place;
Amendment 135 #
Motion for a resolution
Paragraph 9 a (new)
Paragraph 9 a (new)
9 a. Calls on the Commission to complete its own impact assessment on the effects of Pillars One and Two on revenue collection for the Member States and to inform the Council and Parliament about its findings; calls on the Commission, based on such impact assessment, to advise and guide Member States to take positions in the negotiations that defend the global interest and not just the self-interest of certain countries; emphasises that tax sovereignty is best achieved through international cooperation and harmonisation of certain essential features;
Amendment 137 #
9 b. Calls on each Member State and the Commission to make their position in the OECD discussions for Pillar 1 and Pillar 2 publicly known and to coordinate them so as to speak as one single voice;
Amendment 140 #
Motion for a resolution
Paragraph 10
Paragraph 10
10. Regrets that the failure of the G20/OECD IF to find a solution in October 2020 will prolong the under-taxation of the digitalized economy; stresses that the COVID 19 pandemic has largely benefited digital businesses and accelerated the transition to a digitalized economy, thereby re-emphasising the need to reform the current tax system in order to ensure a fair contribution from the digital economy; recalls that digital businesses are among companies that registered excess profits during the COVID-19 pandemic compared with previous years; highlights that governments need to collect unprecedented resources to recover from the COVID-19 crisis and the mobilisation of revenues from under-taxed sectors is therefore much needed;
Amendment 149 #
Motion for a resolution
Paragraph 11
Paragraph 11
11. Insists therefore that, regardless of the progress of the negotiations at the G20/OECD IF, the EU should stand ready to roll out its own solutions for taxing the digitalized and globalized economy by the end of 2021 at the latest, including the adoption of the CCTB and CCCTB proposals together with the revision of the definition of a permanent establishment; recalls that the latter proposals are key to set up an appropriate and modern corporate taxation system; calls on the Commission to present proposals by June 2021, while anticipating their compatibility with the reform by the G20/OECD IF to be agreed on; stresses the need to create a level playing field for providers of traditional services and digital services in the EU by ensuring that the latter are taxed at an adequate rate; inviterecommends the Commission to consider in particular introducing a European Digital Services Tax as a necessary firsme up with a detailed roadmap for corporate taxation reform, taking into account different scenarios, in particular with and without agreement at OECD level by mid 2021; recalls that a European Digital Services Tax can only be envisaged as a first temporary step since more fundamental and long term solutions are needed such as the CCCTB and the revision of the definition of a permanent estepablishment of a company;
Amendment 169 #
Motion for a resolution
Paragraph 12
Paragraph 12
12. Understands that some Member States consider the taxation of digitalized economy an urgent issue and have therefore introduced digital services taxes at national level; recalls that these national measures should be phased out once a multilateral solution is found; calls on Member States to refrain from introducing national solutions unilaterally, as they create a risk of fragmentation of the single marketif an effective multilateral solution is found; recalls that although taxation is currently primarily a Member State competence, they must exercise it in coherence with the common principles of EU law in order to ensure coherence between national frameworks, thereby allowing for fair competition and, avoiding a negative impact on the overall coherence of EU taxation principles, and reducing tax avoidance and tax fraud; warns that digital services taxes are limited in scope and do not sufficiently cover the excessive profit margins by highly digitalized businesses during the COVID19 pandemic; notes in this regard that the digital services taxes do not cover direct online sales to customers; recommends Member States to look beyond digital services taxes as unilateral measures and also consider withholding taxes for example;
Amendment 193 #
Motion for a resolution
Paragraph 13
Paragraph 13
13. Regrets that the Council did not agree on any of the Commission’s related proposals, i.e. the digital services tax, the significant digital presence or the CCTB and CCCTB; calls on the Member States to reconsider their position on these proposals, and to consider all options provided for by the Treaties if no unanimous agreement can be reachedswiftly agree on these proposals, especially in light of the unprecedented circumstances of the COVID-19 crisis, and to consider all options provided for by the Treaties if no unanimous agreement can be reached; considers otherwise that the Council, by not making any progress on legislative files already voted by the European Parliament, would contravene the principle of sincere cooperation as laid down in Article 4(3) of the Treaty on the European Union (TEU);
Amendment 205 #
Motion for a resolution
Paragraph 13 a (new)
Paragraph 13 a (new)
13 a. Calls on the Commission to hold its commitment to use Article 116 of the TFEU for issuing proposals in taxation area, in order to circumvent the unanimity rule in Council and allow co- decision with the European Parliament; highlights that Article 116 TFEU would be a very effective legal basis to allow progress on such proposals, especially compared to the passerelle clause which itself requires unanimity;
Amendment 206 #
Motion for a resolution
Paragraph 13 b (new)
Paragraph 13 b (new)
13 b. Stresses that any new proposal should not come at the detriment of the adoption of the CCCTB; recognises indeed the advantages of the CCCTB proposal, in terms of simplicity and scope; invites therefore the Commission to consider how to better adapt the 2 BEPS Pillars to the CCCTB in case an agreement at the OECD is achieved; calls the Commission to revise the CCCTB proposal, if deemed necessary, taking into account new research and evidence available; recalls that the outcome of the OECD/G20 IF negotiations should not in any way prevent individual countries, and preferably the EU, from taking more ambitious actions;
Amendment 219 #
Motion for a resolution
Paragraph 15
Paragraph 15
15. Calls for a stronger role for Parliament in legislative procedures in the area of taxation; takes note of the Commission’s proposed roadmap to qualified majority voting in its communication entitled ‘Toward a more efficient and democratic decision-making in EU tax policy’; calls the Commission to be even more ambitious in this regard by exploring all options, including the use of Article 116 TFEU;
Amendment 225 #
Motion for a resolution
Paragraph 15 a (new)
Paragraph 15 a (new)
15 a. Strongly encourages Member States to mandate the Commission to negotiate on their behalf any modification of their Double Tax Conventions, in order to uniformly adapt them in line with the agreement that would be found at international and/or at EU level, in particular as regards the definition of a permanent establishment and the creation of a taxable nexus for a significant digital presence;
Amendment 227 #
Motion for a resolution
Paragraph 15 b (new)
Paragraph 15 b (new)
15 b. Highlights that the implementation of an efficient and comprehensive international reform will be eased by the access to country-by-country reporting information; notes that, to date, many countries do not have access to such information; welcomes the recent efforts of the Council Presidency on the Proposal for public country-by-country reporting;
Amendment 231 #
Motion for a resolution
Paragraph 16
Paragraph 16
16. Welcomes the conclusions of the European Council of 21 July 20210, which task the Commission with putting forward proposals for additional own resources including a digital levy; and revenues from a common consolidated corporate tax base; notes that the digital levy needs to collect sufficient revenues in order for it to function as a proper own resource; is concerned in this regard that a narrow digital levy will collect only small revenues; welcomes the idea of a corporate income tax top-up that could function as an excess profit tax, as this could alleviate the unequal playing field exacerbated by COVID19 and restore fairness into the system; notes that the corporate income tax top-up might be the only option that would not infringe on the ongoing negotiations at the OECD; stresses that the digital levy should in no way discourage the adoption of longer- term and most needed solutions at international level and EU level such as the CCCTB and revision of the permanent establishment definition; recalls its position of 15 March 2018 on the CCCTB in favour of allocating a part of the fiscal revenues generated from the common consolidated corporate tax base to the general budget of the Union; calls on the Commission to come forward with such a proposal by the end of 2021 and on the Council to adopt it before the currently envisaged date of 2026;