EU authorities have delivered the 2020 Tax Package which is aiming to address unfair tax competition and tax systems that allow aggressive tax planning within the EU. It looks like the EU is looking to introduce the minimum corporate tax rate, to eradicate controversial tax benefits and exemptions, corporate residency rules, and trading of national passports for investments across the EU sooner or later.
The EU has made big progress in harmonising legal systems of the Member States. The national tax systems are the biggest focus of EU tax authorities now. If the sufficient resources are devoted and there is enough political will between the authorities and the authorities of the Member States, the results of the harmonisation will come sooner rather than later.
One of the examples is the EU authorities are unhappy with the Cyprus Passport for Investment Scheme. Under the pressure from the EU, the Cyprus government has recently introduced more stringent criteria for the applicants. Another matter which EU authorities are focused on is the corporate tax rate of 12.5% which made Cyprus the popular destination for holding and trading offshore companies. It is expected the recent development on the harmonisation of the national tax systems across the EU will force to introduce the minimum tax rate of 15% and remove many tax benefits and exemptions that Cyprus is offering to international businesses at the moment.