To ask Her Majesty’s Government, further to the Written Statement by Lord Deighton on 26 November (WS 37) concerning the meeting of ECOFIN on 7 November, whether they plan to continue their opposition to the proposed Financial Transaction Tax; and whether they will indicate that they will not facilitate the collection of the tax in the United Kingdom.HMG, in the shape of Lord Deighton reassured everyone:
The UK is not participating in the Financial Transaction Tax (FTT) proposed to be adopted by 11 EU member states.Well, that's a relief or partially so, as the chances of HMG holding out are not very strong, if past experience is anything to go by.
The Government strongly objects to certain extraterritorial aspects of the European Commission’s proposal, which in our view breach EU Treaty requirements.
While any eventual FTT is likely to be significantly narrower in scope than the current proposal the Chancellor has been clear that the government will not hesitate to renew its legal action against the FTT if our concerns are not addressed.
The second Question elicited a more intriguing reply:
To ask Her Majesty’s Government, further to the Written Statement by Lord Deighton on 26 November (WS 37) concerning the meeting of ECOFIN on 7 November, what will be the effect of the proposed amendment to Directive 2011/96/EU; and whether it transfers further powers over taxation to the European Union.Once again it was Lord Deighton who replied (well, to be quite precise, as these Questions were written one, the minions dealt with it all, with nary an intervention by the Minister):
The amendment to Article 1 of the Parent Subsidiaries Directive introduces an anti-abuse measure, which requires Member States to withdraw the benefits of the Directive with respect to tax arrangements, where gaining a tax advantage through exploiting the Directive is a main purpose.I shall leave the details to the financial experts among my readers (there must be some) but would like to point out something interesting. The new rule is in line with OECD recommendations. That is in line with what the Boss has been saying for quite a long time (and it feels even longer): it is not always the EU that decides on these and related matters. There are organizations above and beyond it and the EU merely puts their rules and recommendations into place.
UK officials have worked successfully to incorporate UK changes into the text. These ensure that the rule is proportionate, is in line with OECD recommendations on Base Erosion and Profit Shifting, and does not delegate further powers to the Commission.