Europe to weigh if US tax cuts violate ‘trade rules’

Bloomberg

European Union finance ministers were expected to discuss US legislation to slash taxes at a meeting in Brussels on Tuesday and whether the new plan violates international trade rules.
The centerpiece of the tax bill that passed the US Senate is a reduction in the corporate tax rate to 20 percent from 35 percent. The bill still needs to be reconciled with a version passed by the House of Representatives before it can be signed into law by President Donald J. Trump.
“There are some elements of preoccupation—some discriminatory measures—and the possibility that some parts of the reform will violate World Trade Organization rules,” Spanish Economy Minister Luis de Guindos said in Brussels.
“I will request the commission to make further analysis of the potential consequences of the
tax plan.”
The Republican-led effort to reform the US tax code has caused jitters beyond Europe’s borders, with Chinese officials expressing concern that a sweeping policy shift could cause a negative market impact domestically.
The tax issue will be discussed at a meeting of EU finance chiefs in Brussels, European Commission Vice President Valdis Dombrovskis told reporters.
“There are a number of more technical provisions concerning intra-group transactions as regard US groups—how they are taxed outside the US and how they are taxed inside the US,” Dombrovskis said. “The question is how broad the scope is, what are the potential effects on trade.”

Common Stance
The world’s largest trading bloc is concerned that some provisions in the US tax bill currently being debated in Washington could result into a double taxation of European companies, according to EU officials. During Tuesday’s discussion in Brussels, finance ministers were expected to seek to adopt a common stance, without taking any concrete decisions pending the final version of the bill.
Portuguese Finance Minister Mario Centeno, who was elected the new head of the Eurogroup, said European nations need to consider the implications of the US tax cut on the competitiveness of their own economies, adding that the discussion would be “very general.”
“It’s really important for
the euro-area competitiveness
to follow developments around the world,” Centeno said on Bloomberg TV.
“All shocks to the constructive equilibria in the world need to be considered and certainly the domestic policy of the US is of major importance to us.”

EU all set to rubber-stamp tax blacklist
Bloomberg

The European Union is set to agree on a blacklist of tax havens that could potentially face sanctions for failing to bring their standards in line with the bloc, as it seeks to further step up its fight against opaque practices that facilitate avoidance by multinationals and individuals.
The group of jurisdictions is set to be rubber stamped by EU finance ministers at a meeting in Brussels. According to a draft document, the list includes South Korea, Panama, Tunisia, Bahrain, as well as Barbados, Samoa, Grenada, Macau, the Marshall Islands, Palau, and St. Lucia.
The final list is the result of months of screening on dozens of countries and territories, and back-and-forths between the 28-country bloc and various jurisdictions around the world. It could still change depending on the ministers’ political decision. As many as 19 countries will be blacklisted, while another 43 could be included in a separate gray list, to be monitored for their compliance with commitments undertaken.
It comes as the EU has stepped up its efforts in recent years to tackle tax avoidance and evasion around the world—plans that have received fresh impetus following leaks such as the recent Paradise papers, which exposed the scale of large-scale tax avoidance and fed public backlash against such practices.
Throughout the past year, experts from the bloc have been screening 92 jurisdictions to identify whether they met the EU’s standards for transparency or whether they engaged in harmful tax practices. A European government official told that the fact that the final blacklist is much smaller than earlier drafts is a proof that EU pressure brings results, forcing countries to commit to tax transparency.