According to Michel Barnier, without a firm UK commitment to fight tax avoidance, there is no Brexit trade deal
Michel Barnier’s demands the UK’s compliance with Level Playing Field and Sustainability requirements, such as fighting tax avoidance, but Boris Johnson is keen to expand tax-avoiding practices by establishing new tax-free ports in the United Kingdom.
Brexit trade deal talks between the chief negotiator Michel Barnier and the British Prime Minister Boris Johnson haven’t produced the desired outcome for both entities.
After meeting the EU negotiating team, spearheaded by Michel Barnier, in 2018, the European Parliament’s TAX3 secretariat produced a document that highlights the ultimate aim of Brexit negotiations between the EU and UK, concluding that:
“The objective is that the UK will abide by the tools adopted at EU level to fight tax evasion/avoidance.”
According to Michel Barnier, the UK will no longer be able to enjoy preferential treatment, as it used to as a member of the European Union:
“We will not allow a third country, the UK, to dictate the conditions of access to our own market for British goods, services, data, employees and businesses. We wish to remain sovereign, and will set the conditions of access ourselves.”
Following the third round of negotiations for a new partnership between the European Union and the United Kingdom, Michel Barnier voiced his concern regarding UK’s lack of ambition in negotiations, because Boris Johnson’s government failed to engage in ‘real discussion’ on the topic of “level playing field”:
“That said, with the exception of some modest overtures, we failed to make any progress on any of the other more difficult topics. Despite its claims, the United Kingdom did not engage in a real discussion on the question of the level playing field – those economic and commercial “fair play” rules that we agreed to, with Boris Johnson, in the Political Declaration.”
Michel Barnier is confined to developing his negotiations with his British counterparts by European Council’s Recommendation Document for the opening of negotiations for a new partnership with the United Kingdom of Great Britain and Northern Ireland, which consists of the Level Playing Field and Sustainability.
A section within Level Playing Field and Sustainability requirements includes a concise demand for United Kingdom’s commitment to cooperate and fight against tax avoidance practices, as follows:
- The envisaged partnership should recognise and commit the Parties to implementing, the principles of good governance in the area of taxation, including the global standards on transparency and exchange of information, fair taxation, and the OECD standards against Base Erosion and Profit Shifting (BEPS). It should ensure that the United Kingdom applies the common standards applicable within the Union and the United Kingdom at the end of the transition period in relation to at least the following areas: exchange of information on income, financial accounts, tax rulings, country-by-country reports, beneficial ownership and potential cross-border tax planning arrangements. It should also ensure that the United Kingdom applies the common standards applicable within the Union and the United Kingdom at the end of the transition period in relation to the fight against tax avoidance practices and public country-by-country reporting by credit-institutions and investment firms.
- The envisaged partnership should reaffirm the Parties’ commitment to curb harmful tax measures, taking into account the G20-OECD BEPS Action Plan. They should also ensure that the United Kingdom reaffirms its commitment to the Code of Conduct for Business Taxation.
Therefore, in order for the UK to secure a trade deal with the EU, the British government must fight tax avoidance by implementing global standards on transparency and exchange of information, fair taxation, and the OECD standards against Base Erosion and Profit Shifting (BEPS), based on G20-OECD BEPS Action Plan.
Unfortunately, according to this article, protection of British tax-avoiding practices from the new EU Anti Tax Avoidance Directive and the mighty European Court of Justice (ECJ), which did a fine job in preventing tax avoidance within its member states, is the main reason why David Cameron called the EU referendum and why Tory Brexiters campaigned to leave the EU!
Boris Johnson is keen to expand tax-avoiding practices by establishing new tax-free ports in the United Kingdom, and it seems that the British government isn’t keen on committing the UK to Michel Barnier’s Brexit trade deal demand to comply with Level Playing Field and Sustainability requirements, such as fighting tax avoidance.