EU Proposes Change In Decision Making Process For Tax Issues

; posted on
January 18th, 2019

The European Commission announced the publication of communication on a roadmap for a progressive and targeted transition to qualified majority voting (QMV) under the ordinary legislative procedure in certain areas of shared EU taxation policy. The roadmap includes gradual, four-step progression towards decision-making based on QMV as described below.

Qualified Majority Voting

Under the EU plan, tax proposals would instead be approved by a qualified majority (QMV). This means that the proposal would need the support of 55% or more of EU states and at least 65% of the EU population. A ‘blocking minority,’ comprised of four or more member states that represent more than 35% of the EU population, can veto the decision. As such the Member States would be able to reach quicker, more effective and more democratic compromises on taxation matters, unleashing the full potential of this policy area.

The commission also initiates a four-step progression towards decision-making based on QMV as set out below:

  • In step one, QMV should be employed for measures that have no direct impact on Member States’ taxing rights, bases, or rates, but are critical for combating tax fraud, evasion, and avoidance and in facilitating tax compliance for businesses in the Single Market;
  • Step two envisions extending qualified majority voting to instances where taxation supports other policy goals, such as climate change, protecting the environment, or improving public health;
  • In the third stage, the new voting plan (QMV) should be focused on areas of taxation that are already largely harmonized, and which must evolve and adapt to new circumstances, including VAT and excise duties;
  • In step four, QMV should be introduced for other initiatives in the taxation area that are urgently needed to ensure fair and competitive taxation in Europe, such as the Common Consolidated Corporate Tax Base (CCCTB) and a new system for the taxation of the digital economy.

The goal is steps 3 and 4 to be in place by the end of 2025.

Next Steps

The Commission is seeking consultation on QMV in EU tax policy. The EU Member States, the European Parliament, and all stakeholders are invited to engage constructively and define a timely and pragmatic approach for QMV implementation.

Source: European Commission


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