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Fair Taxation: Commission presents new measures against corporate tax avoidance
The Commission presented proposals on 28 January that aim for a coordinated EU-wide response to corporate tax avoidance, following global standards developed by the OECD last autumn. The Anti Tax Avoidance Package would align the tax laws in all 28 EU countries and have Member States implement the international standards against base erosion and profit shifting. It includes legally-binding measures to block the most common methods used by companies to avoid paying tax; a recommendation to Member States on how to prevent tax treaty abuse; a proposal for Member States to share tax-related information on multinationals operating in the EU; actions to promote tax good governance internationally; and a new EU process for listing third countries that refuse to play fair. Collectively, these measures will hamper aggressive tax planning, boost transparency between Member States and ensure fairer competition for all businesses in the Single Market.
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Today we are taking a major step towards creating a level-playing field for all our businesses, for fair and effective taxation for all Europeans.
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Pierre Moscovici, Commissioner for Economic and Financial Affairs, Taxation and Customs
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EU finance ministers broadly agree with conclusions of 2016 Annual Growth Survey and Alert Mechanism Report
At their meeting on 15 January, EU finance ministers welcomed the conclusions of the Annual Growth Survey (AGS) and the Alert Mechanism Report (AMR) that accompanied it. The AGS, which was published on 26 November last year, launches the 2016 European Semester, the annual cycle of economic governance, while the AMR starts the annual surveillance to identify risks of macroeconomic imbalances that require further in-depth investigation as imbalances may hinder the performance of national economies, the euro area, or the EU as a whole. Expressing broad agreement with the Commission’s economic analysis, as detailed in the AGS, the finance ministers stressed that policy should be directed towards consolidating the recovery and tackling macroeconomic imbalances. In particular, they recognised the need to re-launch investment in the EU, to continue structural reforms and to pursue responsible fiscal policies. Regarding the AMR, finance ministers agreed that further action is needed to address imbalances, particularly elevated levels of indebtedness, high unemployment and declining trends in potential growth and productivity growth. They also recognised the need for further analysis of recent developments in the 16 Member States where imbalances were identified last year.
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Investment Plan: EUR 7.5 billion in new financing to mobilise over EUR 50 billion in investment
During 2015 the EIB Group – the European Investment Bank and the European Investment Fund – approved EUR 7.5 billion of new financing to be backed by the European Fund for Strategic Investments (EFSI) guarantee from the EU budget. This financing is expected to trigger total investment worth more than EUR 50 billion, or approximately 16% of the final target of EUR 315 billion. The financing will support 42 infrastructure and innovation projects and over 81,000 SMEs and Mid-caps in the EU via 84 financing agreements already signed with intermediary banks. Private capital is a key feature of the EFSI, which became fully operational in September of last year, and currently represents about 80% of the total expected investment value. Project promoters can register already now their projects on the European Investment Project Portal, which helps match projects with investors. The portal is expected to go live in its full version early this year.
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ECFIN Workshop – "Fiscal policy after the crisis
Following publication of the 2015 Public Finance Report in December of last year, a DG ECFIN workshop on 21 January discussed fiscal policy after the crisis. Academics and policy-makers from national and international institutions participated. The most relevant message, from a paper by J. Escolano and V. Gaspar of the IMF's Fiscal Affairs Department, is that a smooth reduction in debt is also optimal for tax-smoothing purposes. This insight is an improvement on the famous Barro result that tax smoothing is an optimal policy. The debate based on the papers of the session on low inflation showed, however, that debt reduction is more difficult to achieve in a low-inflation environment like the current one. The final drafts of the papers will be available before the summer.
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EU releases EUR 15 million of Macro-Financial Assistance for Kyrgyz Republic
On 26 January, the European Commission approved the release of EUR 15 million as part of the EU's Macro-Financial Assistance (MFA) programme for the Kyrgyz Republic. The payment consists of EUR 5 million in grants and EUR 10 million in loans, and is the second and final part of a EUR 30 million MFA programme. The objective of this assistance is to support the restoration of a sustainable external financial situation for the Kyrgyz Republic, alleviating its balance of payments needs and thereby supporting its economic and social development. The first EUR 15 million in this MFA programme to Kyrgyzstan were disbursed in two instalments, EUR 10 million in grants on 11 June and EUR 5 million in loans on 15 October 2015. In 2015, bilateral EU assistance to Kyrgyzstan amounted to a total of EUR 34.6 million in grants (including MFA and development assistance), the highest amount the EU has ever disbursed to the Kyrgyz Republic.
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November EU current account surplus EUR 12.3 billion; surplus for trade in services EUR 13.8 billion
The EU seasonally adjusted external current account recorded a surplus of EUR 12.3 billion in November 2015, compared with a surplus of EUR 13.2 billion in October 2015 and a surplus of EUR 16.2 billion in November 2014, according to initial estimates from Eurostat, the statistical office of the EU. In November 2015, compared with October 2015, based on seasonally adjusted data, the surplus of the goods account fell (+EUR 7.4 billion compared with +EUR 8.0 billion) and the deficits of the primary income account (-EUR 2.4 billion compared with -EUR 1.3 billion) and the secondary income account (-EUR 6.5 billion compared with -EUR 6.2 billion) increased. The surplus of the services account grew (+EUR 13.8 billion compared with +EUR 12.7 billion). The 12-month cumulated current account for the period ending in November 2015 recorded a surplus of EUR 179.5 billion, compared with EUR 115.7 billion for the 12 months to November 2014. The surplus of the goods account increased (+EUR 107.9 billion compared with +EUR 29.9 billion), as did the surplus of the services account (+EUR 156.3 billion compared with +EUR 153.8 billion), while the deficit of the secondary income account fell slightly (-EUR 75.1 billion compared with -EUR 76.2 billion). The surplus of the primary income account moved into deficit (-EUR 9.5 billion compared with +EUR 8.3 billion).
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Fiscal sustainability report. European Economy. Institutional Papers 18. 25/1
The Fiscal Sustainability Report 2015 analyses the sustainability of public finances and provides an overview of challenges faced by Member States in the short, medium and long term. Although public finances in the EU today are more sustainable than they were at the onset of the crisis, significant challenges remain over the medium and long term because of high levels of debt and population ageing. Moreover, the current macroeconomic context of very low inflation together with moderate GDP growth limits the contribution of nominal growth to the reduction of public debt ratios, and means that reduction can only be achieved through growth-friendly fiscal consolidation. The analysis identifies medium and high-risk EU countries based on factors such as their level of debt and vulnerability to population ageing.
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Fiscal Sustainability Report 2015
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The Fiscal Sustainability Report 2015 provides an overview of the challenges to public finance sustainability faced by Member States in the short, medium and long term.
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Directorate-General for Economic and Financial Affairs
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