FIFTEENTH REPORT
20 July 1999
By the Select Committee appointed to consider Community
proposals, whether in draft or otherwise, to obtain all necessary
information about them, and to make reports on those which, in
the opinion of the Committee, raise important questions of policy
or principle, and on other questions to which the Committee considers
that the special attention of the House should be drawn.
ORDERED TO
REPORT
Taxes in the EU: can co-ordination and
competition co-exist?
| *COM(97) 564: |
Commission Communication: A package to tackle harmful tax competition in the European Union
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| *6651/98: | Proposal for a Directive on a common system of taxation applicable to interest and royalty payments made between associated companies of different Member States
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| 8781/98: | Proposal for a Directive to ensure a minimum of effective taxation of savings income within the Community
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| COM(98) 565: | Commission's first annual report on the Code of Conduct for business taxation and progress report on taxation of interest from savings and interest and royalty payments
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| 12624/98: | Commission Communication: Financial services: building a framework for action
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| 13347/98: | Commission Communication on the application of the State aid rules to measures relating to direct business taxation
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| 8089/99: | Amended proposal for a European Parliament and Council Directive amending Council Directive 76/308/EEC on mutual assistance for the recovery of claims resulting from operations forming part of the system of financing the European Agricultural Guidance and Guarantee Fund, and of agricultural levies and customs duties and in respect of value added tax and certain excise duties
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| 8329/99: | Commission Communication: Implementing the framework for financial markets: action plan
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| * Indicates that the Committee has already cleared the document in question, but that it forms part of the context of this enquiry.
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PART 1 INTRODUCTION
1. The Committee has been
planning for some time to produce a substantive Report on taxation
in the European Union. In summer 1997, an enquiry was launched
into Tax and Competition Policy in the Single Market, on the basis
of Commission Communications on harmful tax competition[1]
and on an Action Plan for the Single Market[2],
as well as a draft proposal on energy taxation[3].
Valuable contributions were made by several witnesses[4].
However, after the evidence had been taken matters moved on rapidly,
with the Commission making a number of specific proposals in the
field of taxation. The Committee therefore decided to publish
the evidence as it stood, "in the hope of informing debate
within the House of Lords and stimulating further debate"[5].
There was clearly a need for an in-depth enquiry into the new
proposals.
2. The Committee therefore decided to mount a new
major enquiry into taxation in the European Union, starting in
March 1999. The enquiry was designed to look both at the firm
proposals on the table and at some broader ideas which had been
floated for the future, particularly in the light of the proposals
for the completion of the Single Market in financial services.
3. An executive summary of this Report is at Part
2. In Part 3, the Report considers the major issues: some
of the fundamental underlying questions on EU taxation. It then
looks at the detailed proposals which have now been brought forward
by the Commission in relation to both direct and indirect taxes,
which are discussed in Part 4. In Part 5, it considers the ideas
for further tax co-ordination which have been floated within the
European Union, but which are not yet the subject of specific
proposals. Finally, Part 6 makes some concluding comments.
4. The enquiry was carried out by Sub-Committee A.
The membership of the Sub-Committee during the enquiry is listed
at Appendix 1. Our witnesses are listed at Appendix 2. We are
grateful to all of them, and particularly to those who gave oral
evidence. Readers may find the Glossary in Appendix 3 helpful.
1 COM(97) 564: Commission Communication: A package
to tackle harmful tax competition and a previous Communication
on the same subject (10427/97): Towards tax co-ordination in
the European Union - a package to tackle harmful tax competition.
Back
2
7861/97: Commission Communication concerning the draft Action
Plan for the Single Market.
9000/97: Commission Communication:
An Action Plan for the Single Market. Back
3
6793/97: Proposal for a Council Directive restructuring the Community
framework for the taxation of energy products. Back
4
Including oral evidence from Commissioner Mario Monti; Mr A J
Tinsley, the Senior Tax Manager of Unilever plc; and officials
from the Department of Trade and Industry, HM Treasury, HM Customs
and Excise and Inland Revenue. Back
5
Tax and Competition Policy in the Single Market, HL Paper
117, 28th Report Session 1997-98, paragraph 10. Back
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