The Next Generation EU proposals include four new tax raising proposals which are required to pay for the vast borrowing brought on by Covid 19. The OECD has previously announced plans for a minimum tax rate and a digital services tax which are seemingly bogged down in interminable debate.

Here Bloomberg highlights the fact that the European Commission could well be proposing an EU wide digital tax raised centrally and a minimum tax rate independently of the OECD if the global initiative stalls. As Gentiloni, Commissioner for taxation, says,

"We should be more ambitious on tax"

The proposals need to be approved by the 27 EU members who have resisted such proposals in the past but with a need to fund €750bn worth of rescue package, most of which is proposed to be raised on capital, it seems unsustainable that the EU will not have its own tax raising powers. Whether the EU manages to make this step will rely as much on the attitude of Hungary and Poland and the Visegrad Group as France and Germany (given approval needs to be unanimous) and may impact on Brexit negotiations in that a financially weakened EU struggling to bring these proposals forward may be willing to bend, or, alternatively, a financially emboldened EU which is successfully taking these proposals forward may take a more hard line approach. Whatever the outcome, there will be political difficulties ahead and we can expect an increased tax burden aimed at MNEs and those which cross boundaries.

Tax teams should monitor the proposals and consider OECD documents which are already in circulation.,