44 Taxation: mutual assistance
| (24805)
11906/03
COM(03) 446
| Draft Directive amending Directive 77/799/EEC concerning mutual assistance in the field of direct and indirect taxation.
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| Legal base | Article 95 EC; co-decision; QMV
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| Document originated | 28 July 2003
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| Deposited in Parliament | 20 August 2003
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| Department | Inland Revenue and HM Customs and Excise
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| Basis of consideration | EM of 10 September 2003
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| Previous Committee Report | None; but see (22537) 10510/01: HC 152-xxxix (2001-02), paragraph 9 (23 October 2002)
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| To be discussed in Council | Not known
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| Committee's assessment | Politically important
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| Committee's decision | Cleared
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Background
44.1 Directive 77/799/EEC of 1977, the Mutual Assistance Directive,
provides the framework for mutual assistance and exchange of information
between EU tax authorities, so as to help them apply their tax
laws more effectively. It provides for three types of information
exchange: on request, spontaneous, and automatic. It also provides
safeguards to ensure that any exchange of information respects
taxpayers' confidentiality. The Directive currently covers both
indirect and direct taxation.
The document
44.2 The draft Directive is intended to amend and update the Mutual
Assistance Directive. The aim is to improve the functioning of
procedures, so as to enable Member States to deal more effectively
with cross-border tax evasion and avoidance. The amending Directive
would:
·
clarify certain provisions, where the meaning is not totally certain;
· modernise information
exchange procedures, more closely aligning those for direct tax
and indirect tax; and
· provide a new
mechanism for co-operation and exchange of information via simultaneous
multilateral controls (joint audits). Member States would be able
to choose on a case by case basis whether or not to participate
in controls.
44.3 Under a separate proposal on administrative
cooperation,[87] exchange
of information on Value Added Tax (VAT) would be dealt with under
the new VAT Regulation and insurance premium taxes would be covered
by the Mutual Assistance Directive. In addition, the Commission
is expected to propose that exchange of information on excise
duties should be covered in a separate instrument. This means
that the Mutual Assistance Directive would, in future, focus on
exchange of information on taxes on income, capital and insurance
premiums.
The Government's view
44.4 The Paymaster General (Dawn Primarolo) tells
us:
"The UK Government strongly supports the
use of exchange of information in combating cross-border tax evasion
and avoidance.
"The Mutual Assistance Directive has provided
valuable benefits to the UK; and the UK has a good record on co-operation
under the Directive with other Member States.
"In general, HMG believes the procedures
under the Directive have worked well and that any practical problems
that arise in operating the Directive can be dealt with effectively
by Member States' tax authorities. But the Government is willing
to consider the modest changes proposed, to the extent that they
can be shown to enhance the effectiveness of existing exchange
of information.
"The Commission have issued the draft Directive
on an Article 95 legal base. This entails qualified majority voting
and co-decision with the European Parliament. The Government's
view is the legal base is incorrect; and that the proposal should
have a unanimity legal base in line with the existing Directive's
legal base, and in line with all previous amendments that Member
States have agreed to the Directive. The UK will pursue this point
in forthcoming meetings of the Council Working Groups."
Conclusion
44.5 We note that the Government, despite its
view that the Mutual Assistance Directive works well and that
any practical problems can be dealt with effectively by the tax
authorities, is willing to consider the proposal if its utility
can be demonstrated. We also note and support the Government's
insistence that the proper legal base be used for this proposal.
On that basis we are content to clear the document.
87 See headnote. Back
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