Speaking as a high-level expert group published its five-month review on taxation challenges for the EU in the digital economy, commissioner for tax and customs Algirdas Šemeta said member states should adopt a common position on corporation tax in the current debate on international reforms. The G20 group of countries is working with the Organisation for Economic Cooperation and Development to implement a plan to tackle on tax avoidance and evasion.

Šemeta said EU member states must speak with one voice as reforms were being decided, to reflect what he called ‘shared priorities’ in the OECD’s project to tackle base erosion and profit sharing. 

He added: ‘I fully agree that this is the only way of securing EU interests and ensuring that the end result is both simple and effective.’

The commission’s digital economy tax review, which was chaired by former Portuguese finance minister Vítor Gaspar, concluded there was a need to modernise the EU tax system to ensure there was both greater fairness and more opportunities to create new jobs and growth as technology made it easier for firms to trade. It noted that while digital products and services present tax challenges to existing tax regimes, they also provide means for ensuring simpler and a more transparent system. 

‘I particularly welcome the emphasis that the report puts on tackling harmful tax competition and the recognition that this involves more than just abolishing harmful regimes,’ Šemeta said. ‘From our experience in the EU, we know that solidarity – or peer pressure – must be engaged to encourage fair play amongst countries. We need to extend this internationally.’

Increasing digitalisation of the economy made a strong case for a Common Consolidated Corporate Tax Base – one tax regime for companies operating across EU member states, he added.

This would offer what he called ‘double dividend. ‘On one hand, its central purpose is to greatly reduce complexities and administrative burdens for cross-border companies working in our single market. On the other, the CCCTB can be a highly effective tool for combating tax avoidance and ensuring fairer revenue distribution between countries.’

Šemeta said he believed that the CCCTB could be the first step towards the more fundamental reform of corporate taxation in Europe, ‘which the report suggests for the longer term’.