Tax policy in the EU - Issues and challenges

EU tax policy is based on national tax systems which are decided by Member States and adapted to prevent national tax provisions hindering the single market and cross-border activities. Tax systems are under pressure to adapt and update as a result of budget consolidation and stimulating growth requirements. The challenges for EU tax policy include globalisation, digitalisation and tax competition, which offer greater room for avoidance, evasion and fraud – to which national and EU borders do not constitute an effective defence. Tax avoidance and fraud call for convergence, either through cooperation or coordination, to fight against behaviour detrimental to fair tax systems and which penalises growth. Convergence is being developed at EU and international level, where exchanges, sharing and tackling tax loopholes are expected to be strengthened to provide an effective answer.