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EU Commissioner Olli Rehn calls for unified EU tax policy

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Olli Rehn, European Union Economic and Monetary Affairs Commissioner, has called for greater harmonisation in EU taxation policy.

Rehn, in a televised interview with Yle TV1 on Saturday, praised Finland’s move to cut its corporate tax rate by four and a half percentage points to 20%, and suggested the EU should try to adopt a unified policy when it comes to taxation.

Finland was the only national economy in Europe to shift from surplus to deficit over the past few years, and Rehn believes the company tax cut will provide a boost to the country’s competitiveness.

“It is vital to foster the competitiveness of companies and thus the conditions of economic growth and employment in all European countries. This is a challenge in particular for Finland, because it is the only so-called surplus economy in Europe, which over the past few years has transformed into a deficit economy,” said Rehn.

Rehn renewed his calls for a unified EU tax policy, having previously said the abolition of tax havens will require greater harmonisation of taxation within the EU.

But efforts to achieve greater harmonisation have invariably failed to overcome obstacles such as feared loss of sovereignty. The common consolidated corporate tax base (CCCTB) and financial transaction tax (FTT) are examples of this, though the FTT is now being advanced by 11 member states under enhanced cooperation.

And Frederic Donnedieu de Vabres, chairman of Taxand, has identified national competition for investment (such as Finland’s corporate tax cut) as another hurdle for harmonisation.

However, the existence of obstacles has not curbed the appetite for harmonisation, particularly among certain EU countries such as France and Germany. The two nations have proposed a number of ideas for further convergence of tax policy.

The most recent incarnation of this drive sees France stepping up its efforts to increase European harmonisation and tackle tax evasion by reinforcing the exchange of banking information across the continent. Pierre Moscovici, the French Finance Minister, has proposed a European version of the US Foreign Account Tax Compliance Act (FATCA).

“I propose that there be an automatic exchange of information; a European FATCA,” Moscovici told Europe 1 radio.

Moscovici also said on Sunday that France would be putting forward a proposal regarding money laundering. No further details were provided, but the proposal will again be delivered in conjunction with Germany.

These developments will tie in with proposals from the European Commission, which launched a consultation on the formation of a European Taxpayer’s Code last month as part of its December Action Plan.

“This is part of the [Commission’s] Action Plan, which seeks to increase cooperation, trust and confidence both between and among administrations, and between administrations and taxpayers. The EU is embarking on this and promoting automatic information exchange as a standard,” said Bob van der Made, of PwC.

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