By TIOL News Service

BRUSSELS, MAY 25, 2013: THE European Union (EU) should channelise the political momentum for a tougher stance on tax evasion, to highlight loopholes in tax systems as it is a question of jointly fighting unacceptable practices that allow some people to avoid paying taxes all together as a matter of fairness. This is the view of the EU Council, which debated the issue recently.

Combating tax fraud has become essential in the context of tight budgetary constraints being faced by the Member countries. The Council has agreed to accelerate work in the fight against tax fraud, tax evasion and aggressive tax planning. Besides, the Council intends to prioritize broadening the scope of automatic information exchange. The European Commission will propose amendments to the Directive on administrative cooperation next month. According to the Council, the reforms will extend exchange provisions to cover a full range of income. The Council also agreed that the EU should play a key role in "promoting the automatic exchange of information as the new international standard."

The Council has highlighted the need for the implementation of the Commission's Action Plan on fraud and evasion containing two recommendations designed to foster a stronger EU stance against so-called tax havens and tackle aggressive tax planning that can help improve chance of eliminating these pervasive problems, and return hundreds of billions of Euro back to the public purse. It is determined that action must be taken at a global level. Countries ought to be encouraged to meet appropriate standards of good governance in tax matters, and engage in global efforts against base erosion, profit shifting, lack of transparency and harmful tax measures.

Negotiations are to begin as soon as possible with Switzerland, Liechtenstein, Monaco, Andorra, and San Marino on improving savings tax agreements. The Commission was last week given the go-ahead to launch the talks, and the Council has now agreed that the proposed revised EU Directive on the taxation of savings should be adopted by the end of the year. Reforms were first mooted by the Commission in November, 2008. Among the other Council conclusions are the necessity of strengthening the EU's Code of Conduct on business taxation and of identifying beneficial ownership, and the importance of accepting the Commission's Directives on quick reaction and reverse change mechanisms as a means of preventing value-added tax fraud. The Commission will assess the challenges of taxation in the digital economy in advance of an October summit on the digital agenda, and will recommend revisions to the parent/subsidy Directive by the close of 2013. The Council will report on the progress of its conclusions by December.