Global Daily Tax News, EU Lawmakers Seek Proactive Response To Int'l Tax Challenges, (Apr 1, 2025)

The European Parliament's Committee on Economic and Monetary Affairs has issued a draft report calling for reforms that would simplify tax compliance for businesses doing business cross border and that would improve the EU's international tax competitiveness. The report also calls for the EU to devise a response to the US Administration's decision to withdraw from the OECD's Pillar Two Global Minimum Tax Framework.

On tax simplification, the report notes that SMEs "face significant fiscal challenges on account of complex tax regulations and fragmented tax systems, which impose high administrative burdens and compliance costs [...]." It urges the European Commission to explore solutions that would further simplify tax procedures and reduce compliance costs. The Committee has called on the Commission to present a study also on how to simplify tax rules and address tax fragmentation for cross-border workers and the self-employed to boost competitiveness.

On Pillar Two, the Committee "reiterated the EU's commitment to the implementation of the OECD Pillar Two agreement, while taking into account the current situation regarding Pillar Two rules, including the recent Executive Order issued by the US President on January 20, 2025, declaring that the OECD Global Tax Deal has no force and effect in the United States."

The Committee urged the Commission to inform Parliament of contingency plans and take "prompt, targeted action to protect EU interests and prevent retaliatory measures."

Finally, the Committee called on the Commission to conduct further studies on the effects of tax incentives for research and development (R&D) and innovation, with a view to enhancing European competitiveness on the global stage.