MEPs deplore stalled reform of Code of Conduct on business taxation 

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MEPs on Thursday expressed their deep disappointment for the inability of member states to agree to a reform of the code of conduct on business taxation.

Speaking in the EP’s tax matters subcommittee with the Chair of the Code of Conduct Group on Business Taxation, Lyudmila Petkova, MEPs denounced member states’ inability to reform the Code, as had been expected at the end of 2021.

The subcommittee’s Chair, Paul Tang (S&D, NL) was the first to open the criticsm. “When you (Ms Petkova) first appeared before this subcommittee, you were negotiating within the Code of Conduct Group a reform of the code to ensure that it will continue to be fit for purpose. Unfortunately, that reform has not yet suceeded, and this because of strong resistance from a few Member States that, to Parliament’s disappointement, do not want an extension of the code’s mandate in its fight against harmful tax practices.

“There is a clear drawback of the unanimity principle in the field of taxation. This principle is preventing a majority of Member States from bringing about a reform that their governments consider crucial and that both the Parliament and the Commission absolutely support. The people of Europe want to see an end to tax avoidance, and your body has the potential to act upon their wish.”

MEPs from the whole political spectrum echoed this view, also asking Ms Petkova whether she saw any room for manoeuvre which would allow a reform to happen or whether the only option was to have a Treaty change to remove the unanimity rule. 

In October, MEPs had adopted a resolution outlining their priorities for this reform, ahead of what was hoped would be an agreed reform by member states by the end of the year.

MEPs also asked to what extent the Code of Conduct Group was addressing the increasing competition between member states on lowering personal income taxes which could lead to certain problems. They also asked about how to better balance the need of controlling tax evasion and fraud with that of permitting healthy tax competition between member states. Questions were also asked to Ms Petkova of her assessment of what barriers there are on exchange of tax information between member states.

You can watch the meeting again here