Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

EU's plan to reduce states' blocking powers on tax to be subject to veto

Published 01/11/2019, 06:15 AM
Updated 01/11/2019, 06:20 AM
© Reuters. FILE PHOTO: EU flags are seen outside the EU Commission headquarters in Brussels

© Reuters. FILE PHOTO: EU flags are seen outside the EU Commission headquarters in Brussels

BRUSSELS (Reuters) - The European Commission is set to fail to break the EU deadlock on tax reforms as it is planning to give states a veto right on a proposal meant to end governments' blocking powers on the matter.

The move, scheduled to be unveiled on Tuesday, would come after EU states failed last month to agree on a common levy on digital multinationals which stand accused of paying too little tax by routing their profits to smaller, low-tax countries of the bloc, like Ireland or Luxembourg.

Decisions on tax matters at EU level require the unanimous backing of the 28 member states, which on other issues usually decide by a majority vote.

A long-neglected treaty article allows the commission to compel states to drop the unanimity rule when competition in the EU market is distorted. Invoking this rule would allow decisions on tax reforms to be made by majority.

But, after having considered triggering the article, the EU's executive is now expected to make its plan subject to the unanimous backing of EU states, three EU officials said, meaning it is unlikely to be approved.

Smaller states have for years used the veto power to block tax overhauls at EU level over fears of losing tax revenues.

The switch to majority voting has been threatened for years by the Commission in a bid to break the stalemate.

Commission president Jean-Claude Juncker, a former prime minister of Luxembourg, flagged this plan for the first time in 2017 but no concrete proposal has been made so far. The commission's five-year mandate ends this year.

Juncker has said that he would be in favor of moving to majority voting in sectors such as sales tax, digital taxes, financial transaction levies and the harmonization of EU countries' tax bases, which would reduce governments' tools for attracting firms with tax sweeteners.

© Reuters. FILE PHOTO: EU flags are seen outside the EU Commission headquarters in Brussels

Reforms under discussion would leave EU states the power of setting tax rates at a national level in most areas.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.