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ERT Expert Paper – Business Taxation for the 21st Century

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In this Expert Paper, ERT gives its view on several aspects of the European Commission’s recently presented Communication “Business Taxation for the 21st Century”.

Tax transparency:
ERT supports the ongoing fight against profit shifting and tax evasion. Tax transparency initiatives in the EU should target those situations where there may be a real risk of harmful tax practices. At the same time, potential misinterpretation and risks to competitiveness related to the disclosure of sensitive commercial information by regular taxpayers should be avoided.

BEFIT – “Business in Europe: Framework for Income Taxation”:
ERT is supportive of a common framework for corporate taxation across the EU. It should build on the CCCTB proposals
A comprehensive tax credit system for more research and development in Europe would be a first important step towards becoming a leading and competitive innovation location.

Debt-equity bias:
ERT strongly supports taxation policies and specific tax-based measures that support European companies in investing in R&D, infrastructure, technology, and innovation. Taxation policy can play a vital role in the economic recovery from COVID-19.
ERT appreciates the move to put equity on a more equal footing as compared to debt financing with respective tax measures.

International Tax Reform:
ERT welcomes the global agreement endorsed by G20 Finance Ministers and Central Bank Governors on 10 July 2021. The final global agreement on international tax reform should lead to a level-playing field for the taxation of all industries including the leading digital companies.
As many EU companies have been harshly hit by the economic consequences of the pandemic it is of utmost importance that companies can fully offset their losses against future tax liabilities in the new tax system resulting from the OECD’s GLOBE tax reform and its implementation in the EU. Limiting the use of such losses would result in an undue tax burden that would hinder the post-pandemic economic recovery for the companies subject to such new rules.