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Semeta sets out case for eliminating tax obstacles in single market

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Algirdas Semeta, the European commissioner for taxation and customs union, audit and anti-fraud, won this year’s Editor’s Choice Award at International Tax Review’s European Awards.

He was unable to attend the presentation in London on May 16, but sent this acceptance letter.

Thanks to International Tax Review for honouring me with this year's Editor's Choice award for contributing to addressing tax obstacles for businesses and citizens in the single market.

I am pleased to accept this award as someone that has had the biggest impact on tax practice or administration in Europe in 2011 as recognition that my actions to create a real single market from the tax perspective is also something important for tax professionals.

In the EU we are faced with major challenges in terms of fiscal consolidation as well as promoting growth and employment. Taxation has an important role to play here.

In particular, we cannot expect our citizens to accept cuts in public services and increases in taxation without first looking to ensure that existing tax rules are fully respected and that tax systems are sufficiently robust and fit for purpose.

I believe that we need to concentrate our efforts on developing tax systems that ensure a fair division of the burden, are efficient and cost effective, and are not open to abuse.

Fighting fraud

In parallel with such actions I firmly maintain the importance of vigorous action to fight tax fraud and evasion as well as targeting aggressive tax planning where this undermines the spirit and logic of our taxation systems. I fully subscribe to ensuring that the tax burden on business and citizens should be as light as possible while being consistent with member states' social models. However I cannot accept that the rationale and logic of tax systems that attempt to ensure a fair distribution of the tax burden should be systematically undermined by aggressive tax planning.

In this context I believe that tax professionals can and should assist in the identification of weaknesses in tax systems. This can create benefits for those companies and individuals who fully subscribe to the letter and spirit of tax laws and seek to maintain high reputational standards.

The Commission for its part has already taken action against tax fraud in many areas. It has adopted a series of measures, including the creation of Eurofisc, to tackle large- scale fraud taking advantage of the weaknesses of the EU VAT system. The Commission has also announced measures to be adopted soon to fight VAT fraud such as the rapid reaction mechanism to allow member states to take action when confronted with new fraud schemes.

Action against tax havens

At international level the question of non-cooperative jurisdictions and aggressive tax planning is on the agenda of the European Commission, but also on the agenda of the OECD, the European Parliament and the European Council. The European Council concluded in March 2012 that:

"Tax policy can contribute to fiscal consolidation and growth. In line with the Council conclusions of 21 February, and recognising Member States' competences in this area, the European Council invites Member States, where appropriate, to review their tax systems with the aim of making them more effective and efficient, removing unjustified exemptions, broadening the tax base, shifting taxes away from labour, improving the efficiency of tax collection and tackling tax evasion. The Council and the Commission are invited to rapidly develop concrete ways to improve the fight against tax fraud and tax evasion, including in relation to third countries and to report by June 2012."

After having promoted a clear policy on tax governance issues in two communications (2009 and 2010) the Commission will review progress and come forward with a communication on good governance in relation to tax havens and aggressive tax planning before the end of this year. The initiative will propose further and improved action to protect member states' tax systems. My hope is that this will pave the way towards an international consensus to definitively address these issues.

I look forward to further positive developments both in the EU and in a broader international context and I will be pursuing my objectives vigorously in the years to come.

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