ECOFIN - Oncoming EU Efforts To Tackle Tax Fraud And Challenges Brought By Economy Digitalization

; posted on
May 1st, 2018

The Economic and Financial Affairs Ministers (ECOFIN) held an informal meeting in Bulgaria. Documents regarding the meeting have been available to the public, indicating oncoming efforts on the Union level to tackle tax fraud and challenges brought by economy digitalization.

Tackling Tax Fraud

Tax fraud has led substantial tax gap to the Union. VAT fraud through missing trader intra community (MTIC) alone could lead to EUR 40 to 60 billion tax leak annually, with tax avoidance by companies costing EU countries another EUR 50-70 billion in lost revenue a year. The Ministers are aware of the fact that the current level of administrative cooperation and exchange of information between tax administrations is not as effective as it could and should be, although enhancing administrative cooperation and effective exchange of information among Member States is high on the EU tax policy agenda.

Possible solutions should draw attention to two aspects: i) the instruments for administrative cooperation in the EU; ii) cooperation requires that national administrations have the capacity to sustain it and benefit from its advantages.

CCCTB and Tax Challenges of Digital Economy

The Ministers noticed that member states are facing corporate taxation in an ever-changing international environment, but the EU is a useful platform through which the EU Member States could react strategically to major shifts in the international tax environment. Compared with a single country, EU speaks most strongly when it speaks with a common voice. On the fair taxation topic, the Ministers stick to the CCCTB proposal, which could be adjusted in the digital context.

As regards challenges raised by digital economy, the Ministers reviewed the EU approaches, which will be further discussed in June 2018 at European Council. In particular, the Ministers also noticed the Interim Report released by OECD, but no obvious inclination is given in the document released.

Sources: Working Session II, Working Session III

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