Dear Friends,

It is my great pleasure to welcome you to the new-look TAXUD newsletter. I hope it will help to keep you informed of our activities as we drive forward the European Commission’s agenda in the areas of Taxation and the Customs Union!

For DG TAXUD, 2022 ended on a high following the major political agreement on the Carbon Border Adjustment Mechanism (CBAM) and the Council approval of the so-called ‘Pillar 2’ Directive on minimum effective tax rates in the EU. Both policies make the EU global leaders in the field. The CBAM is the first of its kind in the world. It will put a fair price on the carbon emitted during the production of carbon intensive goods that are entering the EU, and thereby reduce the risk of carbon leakage while encouraging cleaner industrial production in non-EU countries. Meanwhile, the Pillar 2 agreement makes the EU the first region in the world to introduce a common floor for effective corporate tax rates. This will undoubtedly have a lasting effect on base erosion and profit shifting, and enhance the fairness of taxation globally.

2022 will of course be remembered for Russia’s brutal aggression against Ukraine. But it was also the year, in which the EU, with its international partners, took extraordinary measures to support Ukraine and its people. We imposed stringent sanctions against Russia and Belarus, with customs at the forefront in enforcing sanctions on goods’ imports and exports.

Given the impact of the war on energy costs, the solidarity contribution regulation adopted in September 2022 on the surplus profits of fossil fuel companies will support businesses and households across the EU, especially the most vulnerable in this difficult period. And we rapidly rolled out humanitarian measures to assist Ukraine, including targeted tax and duty waivers and Solidarity Lanes for swift, smooth trade flows.

Going forward, the EU will remain steadfastly committed to the Ukrainian cause, hoping that the war will end as soon as possible. Its ramifications on the energy market, on global and regional supply chains and the EU’s industrial policy at large, however, will last for decades to come. The Commission is intent to shape this new era, including through major tax and customs reforms.

In March 2023, the Commission will table an ambitious reform of the EU Customs Union. In the year of the 30^th anniversary of the Single Market, the Customs reform will seek to strengthen its integrity by more effectively enforcing EU rules and standards at our external border for goods. It is also with a view to reducing remaining obstacles for cross-border investment in the Single Market that we are working on reforming and simplifying business taxation within the EU. The much-anticipated BEFIT proposal will be unveiled in 2023 as part of a broader effort to accompany the EU’s economy through the twin digital and green transition. This reform will build on the global tax deal, including Pillar 1, which promises to bring more fairness to our tax systems and more tax certainty for businesses. Once sufficient progress has been made at international level, we will be ready to ensure Pillar 1 is also pinned down in EU law. In 2023 we will also review and monitor the contribution of our initiatives to the EU’s own resources proposals, a key Commission commitment under the Interinstitutional Agreement of December 2020.

And if that wasn’t enough, we’ll also present new initiatives to clamp down further on enablers of tax abuse, to improve withholding tax relief procedures for cross-border businesses in the EU, and to update our tobacco tax rules.

Following the success of our first ever Tax Symposium in 2022, we are already starting to plan the follow-up event and next steps for this reflection process. Look out for useful reports from us over the course of the year too, including the VAT Gap Study, Tax Trends Report and our Annual Report on Taxation.

This is just a small taste of what is to come in the year ahead in EU tax and customs policies. Our monthly newsletter will keep you up to date on these projects and all of our work. I hope you enjoy it!

With my very best regards,

Gerassimos Thomas

Director-General for Taxation and Customs Union

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