Before the European Commission can implement a unified tax system across the EU, it must first establish a uniform definition of the tax base. Introducing a flat, EU-wide corporate income tax rate is essentially meaningless if each member state retains discretion over how the tax base is determined.
The OECD's Pillar Two initiative,the so-called "Global Minimum Tax",resorted to using income as reported under financial accounting standards. This approach is problematic, particularly because financial accounting (especially under IFRS) is based on general principles rather than strict rules, and lacks the comprehensiveness of frameworks like U.S. GAAP. Building a tax system on such a fluid foundation risks︀ inconsistency and manipulation. The result? Bermuda has implemented its own minimum tax for multinational companies.︁ Do you think they are going to enforce the law aggresively just for the benefit︂ of some high-tax European countries? Of course they won't!
Moreover, I remain skeptical about the︃ EU’s ability to reach consensus on substantive fiscal matters,beyond information exchange, which is the one︄ area where real progress has been made. Even if an agreement were eventually reached, the︅ political process in the EU is notoriously slow. Tax harmonization requires swift, coordinated action,something not︆ typically associated with the current generation of EU policymakers.
The OECD's Pillar Two initiative,the so-called "Global Minimum Tax",resorted to using income as reported under financial accounting standards. This approach is problematic, particularly because financial accounting (especially under IFRS) is based on general principles rather than strict rules, and lacks the comprehensiveness of frameworks like U.S. GAAP. Building a tax system on such a fluid foundation risks︀ inconsistency and manipulation. The result? Bermuda has implemented its own minimum tax for multinational companies.︁ Do you think they are going to enforce the law aggresively just for the benefit︂ of some high-tax European countries? Of course they won't!
Moreover, I remain skeptical about the︃ EU’s ability to reach consensus on substantive fiscal matters,beyond information exchange, which is the one︄ area where real progress has been made. Even if an agreement were eventually reached, the︅ political process in the EU is notoriously slow. Tax harmonization requires swift, coordinated action,something not︆ typically associated with the current generation of EU policymakers.