Great! Now that we’ve jogged your memory, let’s look at the latest developments on how the European Union is planning to draft new tax legislation’s on the usage of cryptocurrencies.
In a recent publication by the EU and Economic and Financial Affairs Council (ECOFIN), it is being suggested that there seems to be a “need for an effective and fair taxation system fit for the digital era”.
The conclusion was drafted after extensive discussions about the digital economy were held throughout the year. It suggests that the EU is actively looking into reforming taxes via an effective taxation plan to ensure that the digital economy could fall within the same lines as other recently developed and conventional industries.
Neutralizing Taxation Disputes
The digital economy is booming at an unparalleled speed. Many might recall how Bitcoin was treated like a joke years ago until it reached where it is now. Countries such as Japan are now validating it, making it legal tender. This goes on to show that turning one’s gaze away from this growing industry is not an appropriate way to deal with this rise of power.
To no one’s surprise, the EU and its stakeholders are smart enough recognize the digital economy. The reforms being suggested look at addressing real issues, such as the possibility of double taxation disputes between Member States that would undermine the EU’s Internal Market. Negating any such possibilities will also help the EU have fewer things to worry about for its Anti-Competition Commission, which looks into harmful tax practices within the EU.
This would relate to which tax policy options and tax rules would foresee similar situations in Member States and the way to deal with them. It would also urge the reporting of relevant data by digital platforms and relevant marketplaces to appropriate tax authorities. The suggestions do not only end there, as they also hint towards the incorporation of the proposed reforms into existing international tax laws, which would allow the exchange of relevant information between jurisdictions.
The ECOFIN also suggests the implementation of adding a temporary equalization levy, based on revenues from digital activities in the EU that would remain outside the scope of double tax conventions concluded by Member States.
This method would be relevant to EU’s action plan aimed at coordinating an EU-wide response to corporate tax avoidance, following global standards developed by the Organisation for Economic Co-operation and Development (OECD).
Collaborating with International Partners
In order to create reforms that have as much thought put into them as possible, the ECOFIN is looking into collaborating with the (OECD) along with other international partners.
It has been reported that the OECD is currently analyzing business models of the digital economy and will be slated to share its findings at the G20 in 2018.
New Reforms Could be Presented by as Early as 2018
EU Member States have never been shy about levying taxes that ensure the collective sovereignty of all stakeholders. Likewise, the recent publication and proposed suggestions seek further discussion and agreement across the board in regard to digital economy, which essentially means drafting a comprehensive EU-wide tax policy that responds to the challenges which come with the digital economy. As per reports, the ECOFIN is aiming to collaborate with relevant stakeholders in order to present international tax proposals by as soon as early 2018.