CO-OPERATION IN THE FIELD OF TAXATION
Commission Communication on the desirability of continuing a programme of action to ameliorate the taxation systems of the internal market
Draft Decision of the European Parliament and of the Council adopting a Community programme to improve the operation of taxation systems in the internal market (Fiscalis 2007 Programme).
|Legal base:||Article 95 EC; co-decision; qualified majority voting
|Document originated:||17 January 2002
|Forwarded to the Council:||17 January 2002
|Department:||HM Customs and Excise and Inland Revenue
|Basis of consideration:||EM of 28 February 2002
|Previous Committee Report:||None
|To be discussed in Council:||Not known
|Committee's assessment:||Legally and politically important
|Committee's decision:||Not cleared; request to be kept informed
11.1 The existing Fiscalis programme was established
in 1998 for five years with the objectives of improving co-operation
between Member States and candidate countries in the field of
indirect taxation, disseminating best practice and helping officials
to reach a high level of knowledge of EU indirect tax law.
11.2 The importance of such co-operation is underlined
by the Commission, which argues that in the absence of full co-operation
between national tax authorities, large-scale fraud is possible
because goods transported by commercial operators from one Member
State to another cross Member States' borders free of VAT or excise
duty. In 2001 an interim evaluation of the Fiscalis programme
concluded that significant knowledge and experience had been disseminated
to participants in the programme, which had helped in the fight
against fraud. The present programme ends on 31 December 2002.
11.3 The proposal is for the creation of a new five-year
programme for administrative co-operation on tax (Fiscalis 2007).
The Paymaster-General (Dawn Primarolo) outlines the key changes
to the programme in her Explanatory Memorandum of 28 February
- a closer linking of the programme objective with EU tax strategy;
- an extension to include direct tax;
- an extension to include insurance premium tax,
- allowing EU applicants to participate for part of the programme
prior to accession and the full programme after accession; and
- an increase in funding from _40m (£24m) to _56m (£34m).
11.4 Fiscalis 2007 will support improved electronic systems
for the exchange of information between national tax administrations,
cooperation in investigations, training seminars and exchanges
of officials between national administrations.
The Government's view
11.5 The Paymaster-General tells us that the Government
recognises the importance of administrative co-operation in countering
fraud and generally supports the Fiscalis programme. However,
the Government disagrees with the proposed extensions to direct
tax and Insurance Tax Premium (IPT). The Minister says:
"The Government does not consider that the Commission has
put forward any convincing arguments, or evidence, that such an
extension is justified and would be of any real benefit to Member
States. On the contrary it will impose additional costs on the
programme budget and on Member States' tax administrations. The
circumstances of direct tax and VAT/excise duties are very different,
since VAT and excise share a common body of European law with
other Member States whilst neither IPT nor direct tax legislation
have the same common grounding.
"Like the existing Fiscalis programme, the proposal is on
an Article 95 legal base. In several respects the proposed new
programme is different from the existing one, and the appropriate
legal base will depend on the final scope of the provision."
11.6 Last week we cleared a document relating to Customs
2007, which amongst other things, aims to reduce customs fraud
and compliance costs by promoting the development of an electronic
customs system in Member States and candidate countries. Fiscalis
2007 encourages Member States and candidate countries to cooperate
similarly when combatting tax fraud. Both programmes are generally
to be welcomed.
11.7 However, like the Government, we are concerned
that the Commission is seeking to extend the scope of the Fiscalis
programme to direct tax (income and corporation tax) without providing
adequate justification. The Commission seems to be trying to make
a link between coordinating and harmonising of direct taxation
and a properly functioning single market. We question the validity
of such a link. Like the Government, we also question whether
closer co-operation on direct taxation lies within the competence
of the Commission. We fully support the Government's position
on these matters.
11.8 We leave the document uncleared and request to
be kept fully informed of progress on it.