Experts and MEPs discuss tax implications of US policies
MEPs of the Tax matters subcommittee on Tuesday heard experts about the tax implications of the Trump administration’s policies.
The hearing brought together representatives of the European Commission, businesses, academia, and the EU Tax Observatory. It will inform MEPs before a delegation from the subcommittee travels to Washington DC and New York in the last week of October.
The invited speakers outlined the differences between the US corporate tax regime and the international agreement reached at OECD level (the Pillar 2 agreement) and put forward some ideas of how the so-called ‘side-by-side’ approach could work. The key would be to ensure that US companies did not end up in an unfairly advantageous situation. For this the best route would be to establish a safe-harbour mechanism because equivalence of the US regime and Pillar 2 would not be possible, the Commission representative argued.
Speakers said that international tax cooperation was now more difficult due to the US but also insisted that the EU was far from being alone in its continuing support of the Pillar 2 agreement, which, they said, could reduce profit shifting by 50%. The representative of the EU Tax Observatory also asked to refrain from aligning on the US model, arguing that there was still a rationale for a minimum tax rate as prescribed by Pillar 2, as well as the interlocking principle contained in it. The representative of Business Europe however warned that without global adoption, the OECD rules risked undermining the EU’s competitiveness. He also said that the ‘side-by-side’ approach would spare US companies many of the burdens faced by EU companies.
MEPs asked further questions about the US tax policies, including about the effects these would have on other international negotiations, and what the biggest problems the rules created. They also asked about the US tariff policies would affect the EU.
You can watch the hearing again here.
Contacts:
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John SCHRANZ
Press Officer (MT)