EU Member States Give Green Light for FTT
First published in the International Tax Review, 23 January 2013
11 EU member states have now received the go-ahead to start negotiating the terms of the Financial Transactions Tax (FTT) after EU Finance Ministers approved the implementation of the tax.
Of the 27 member states, all voted in favour execept the UK, Malta, the Czech Republic and Luxembourg, who abstained. This allows the 11 member states to begin to negotiate the details of the FTT they will introduce.
The European Commission confirmed that Algirdas Semeta, Commissioner for Taxation, Customs Union, Audit and Anti-Fraud, will put forward a proposal of the FTT next month.
However the FTT has faced opposition, most notably from the UK, with Chancellor George Osborne arguing that a tax on mobile transactions that does not include America or China would be extremely damaging to both Britain and Europe as a whole.
Frederic Donnedieu de Vabres, Chairman of Taxand, said
"As things stand there is a striking lack of guidance on both the rate and scope of the new levy, leaving the financial sector in the dark as to how they might structure their equity, bond and derivative trading operations going forward.
The implementation of the tax will also result in a trading dichotomy across Europe. As things stand, financial hubs such as Frankfurt, Paris and Madrid will be affected by the tax, with other centres of trading, including London, seemingly gaining a significant advantage through their resilience in not signing up to the agreement."
Frederic says that the implementation, in whatever form it finally takes, could have serious consequences for the overall competitiveness of Europe as a global hub for financial services.
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