EU pledges to crackdown on double taxation

Removing cross-border tax obstacles for EU citizens and businesses, as well as preventing tax fraud and increasing tax transparency a must for the European Union action in the fiscal field

European Parliament’s Economic and Monetary Affairs committee has approved a report by the Sweden’s Folkpartiet MEP, Olle Schmidt on the EU’s Annual Tax report. The report focuses on the tax initiatives taken by the Commission during 2011 and on areas where further initiatives are necessary in order to improve the functioning of the Single market and to create a more competitive Europe.

The report also addresses tax problems that EU citizens face in cross-border situations within the EU. For example, EU citizens working or investing in another EU Member State who encounter issues of double taxation and have difficulties with obtaining allowances, tax reliefs or deductions from foreign tax authorities.

Though taxation is mostly a national and not an EU competence, the financial and economic crisis has revealed the risks posed to the Single Market by contradictory tax policies and the need for closer coordination.

The EU Treaty foresees only simple consultation of Parliament and unanimity in the Council. The report just approved by the EP’s Economic and Monetary Affairs committee is a clear indication action is needed to coordinate Member states’ fiscal policies and avoid cases of double taxation.

"I welcome that the Commission recently adopted a Communication on Double Taxation, where concrete measures are announced, including the creation of an EU Forum to develop a code of conduct on double taxation and a binding dispute resolution procedure for unresolved double taxation cases. This is an area where the European Union can make a real and practical difference to EU citizens", commented Olle Schimidt.

A public consultation carried out by the Commission found that more than 20% of reported cases of double taxation of businesses were worth over €1 million, while for individuals, more than 35% of double taxation cases were worth more than €100 000.

EU Council extends Euratom program for nuclear research for 2012 and 2013

The European Council has extended the European Atomic Energy Community (Euratom) framework programme for nuclear research and training activities (17503/11+ COR) for a two-year period.

Due to expire at the end of 2011, the Euratom program is extended in order to align it with the end of the EU’s current financial cycle, set for end of 2013. Euratom programs are limited by the Euratom treaty to five years, whereas the general 7th framework program for research, which runs until end 2013, lasts for seven years.

The framework program comprises two types of activities:

1. Indirect actions

Indirect actions in fusion energy research and research on nuclear fission, safety and radiation protection (17504/11).

The fusion energy research activities include, as a central objective, to achieve the construction of ITER (International Thermonuclear Experimental Reactor), a major experimental facility to demonstrate the scientific and technical feasibility of fusion power.

Rules for the participation of undertakings, research centres and universities and for the dissemination of research results apply to this specific program (17506/11).

2. Direct actions

Direct actions for activities of the Joint Research Centre in the field of nuclear waste management, environmental impact, safety and security (17505/11).

The nuclear fission research activities are in line with the objective of enhancing the safety of nuclear fission and other uses of radiation in industry and medicine.

The activities of the JRC cover customer-driven scientific and technological support for the formulation, development, implementation and monitoring of the Union’s policies, with an enhanced focus on safety and security research. The JRC works as an independent reference center of science and technology in the Union.

A maximum amount of EUR 2.5 billion, including additional financing of the ITER project (18322/1/11), is allocated for the implementation of the Euratom programme for the years 2012 and 2013.

Its extension will continue to contribute to the implementation of the “Innovation Union” strategy (17165/10), by enhancing competition for scientific excellence and accelerating the deployment of key innovations in the nuclear energy field, notably in fusion and nuclear safety, and will contribute to tackling energy and climate change challenges.

Child sex abuse net crushed, 112 arrested in 26 European countries

Law enforcement agencies from 26 European countries, supported and coordinated by Europol, have carried out a major crackdown against online child sex abuse file-sharing networks. ‘Operation Icarus’ – that is the name of the joint actio – final results account for 112 individuals arrested and 269 more identified as suspects, spread across 22 out of the 26 involved countries.

These numbers are only a fraction of what the investigators hope to accomplish in the future: house searches have allowed seizing a lot of materials, expecially videos, and police officers are confident forensic examination will support follow-up investigations and possible prosecution of offenders. However, this operation has already uncovered previously unknown networks of child sex offenders operating on different internet channels.

This operation shows how the internet is helping offenders to develop better techniques for sharing images on a global basis and for protecting their identity.

The problems involved are becoming harder to police and call for sustained efforts by policy-makers and law enforcement agencies to ensure that society’s response remains strong and agile in this area. Europol is committed to playing a leading part in this work through its unique capabiliites to develop intelligence and digital forensic skills across Europe and through the coordination of major international operations.

“This is the latest major success in over 10 years of Europol supporting law enforcement agencies in Europe in their fight against child sex abuse online”, commented Rob Wainwright, Director of Europol. 

Investigations are ongoing and more arrests are expected. Special focus will be on identifying the producers of the material, the suspects and their victims. Among those arrested for downloading illegal material was one who is suspected of grooming a young child, and was arrested before being able meet ths child face to face.

Operation Icarus represents a first-timer after the signing of the new action plan of the COSPOL Internet Related Child Abuse Material Project (CIRCAMP), an initiative by EU police chiefs led by Belgium and funded by the European Commission. CIRCAMP includes countries like Belgium, Denmark, Finland, France, Germany, Ireland, Italy, Malta, Netherlands, Norway, Spain, Sweden, plus the two European supranational police forces, Europol and Interpol.

The joint operation was actually initiated during a CIRCAMP meeting at the start of 2011. It was agreed that the National High Tech Crime Unit of the Danish Police (DK NITEC) should be the lead country and carry out the investigations because of its expertise in illegal material exchange through file sharing systems, known as peer-to-peer. After the collection of intelligence by the Danish National Police, an operational meeting was organised at Europol in September 2011, to disseminate intelligence packages to the involved EU Member States and countries with a Europol operational agreement.

The euro crisis: lessons for East Asia

The crisis of the European union common currency is threatening the well being of the whole world. Economists and analysts the world over are studying the mechanisms of the crisis in order to understand which particular lessons can be learned for the next future. One of these scholars is Stephen Grenville, Visiting Fellow at the Lowy Institute for International Policy ed anche ex Vice Governatore della Reserve Bank australiana.

The article has been published on the East Asia Forum website. An earlier version of this article was first published here on the Lowy Institute for International Policy website.

Only a few years ago, the European common-currency arrangements were held up as a possible model for Asia.

With the euro under serious threat, we do not hear much about this now, but the current mess in Europe could well contain a number of lessons for Asia.

Lesson one might be surprising at first sight: membership of a currency block is still seen as valuable. Ireland, Portugal and Greece seem ready to undergo years of wrenching austerity in order to stay in. Greece understands that in leaving the euro, it would be swapping one set of problems for another. And countries such as Turkey are still very ready to join.

Lesson two is more obvious: it is hard to make common currencies work. Currency blocks work smoothly only if the member economies have a lot in common. There was always the promise — or hope — that membership would be the catalyst to make Greece more like Germany. But for Greece, there has been neither economic nor political convergence, and continuing membership may prove to be unworkable.

Lesson three is an old one: financial markets are prone to radical changes of risk assessment and lemming-like herding. The markets initially treated Greek debt as more or less on par with German debt. But when they belatedly perceived the reality, they pulled the plug.

Lesson four is that support mechanisms are needed when markets lose confidence. Even countries like Spain and Ireland — which are trying harder than Greece to be good euro citizens — need external support. The euro arrangements are providing this through loans and the support of the European Central Bank (ECB). There is a further sub-lesson here: when the crunch comes and confidence is lost, the supportive response is always tentative, inadequate and chaotic. It is always too little, too late.

So, what are the implications for East Asia’s emerging economies? Despite strong international advice after the Asian crisis to adopt freely floating exchange rates, these countries are yet to adopt a pure free float. They are managing their exchange rates, not only to smooth out volatility, but also to resist appreciation pressures that would diminish their international competitiveness. And as their production structures are becoming increasingly integrated through supply-chain frameworks, maintaining competitive parities with neighbours is becoming more important.

So far, this maintenance of competitive parity has been an informal affair, and it could be given more regional structure. If each country maintained stability (perhaps within a band) vis-à-vis a common basket of currencies — including a heavy weighting of Asian currencies — this would have some of the characteristics of the early stages of Europe’s move to the euro.

While this sort of structure creates tighter relativities, it sets up potential vulnerabilities. In Europe, the euro’s precursors — the ‘snake’ and the European Exchange Rate Mechanism — both broke down. So support arrangements like those offered by the ECB would be an essential part of any tighter currency arrangements. Emerging East Asian economies might receive help from the IMF, but many still carry bitter memories of the Fund’s failures in 1997. And while the Chiang Mai Initiative is exactly the sort of arrangement that might do the job, it proved unusable when it was needed in 2008, and in its present form provides only trivial support.

Asia might also heed the lesson that currency blocks should choose their participants carefully. One suggestion is that a smaller yuan-based grouping of ASEAN, China, Hong Kong and Taiwan might make more sense than a region-wide linkage.

All this leaves Asian exchange rates in an awkward policy space. The managed rates of the post-1997 period are working well enough, but continued reserve accumulation is not sustainable, and running chronic current account surpluses is not optimal. Capital should be flowing ‘downhill’ to these emerging countries, not in the reverse direction. Establishing a stable range of relativities among a sub-set of the region might be a start in the right direction.

EU, an extra half a billion euros to close old Soviet-type nukes

The European Commission has proposed to provide further EU assistance of €500 million to support the safe decommissioning of old Soviet-type nuclear plants in Bulgaria, Lithuania and Slovakia. The proposal foresees for Bulgaria additional €185 million until 2020, for Lithuania €210 million until 2017 and for Slovakia €105 million until 2017 (in 2011 prices).

This new financial assistance should support the efforts of the three Member States who are ultimately responsible for nuclear safety, including the financing of decommissioning. EU Commissioner for energy Günther Oettinger said: "It is in our citizens’ interest, that these reactors will be safely decommissioned and that they will never be restarted again. This additional financial support will help the three Member States to timely progress in defueling and decommissioning of these nuclear reactors. This is a clear expression of solidarity of the EU, which has put nuclear safety as a priority."

The Union assistance for decommissioning of nuclear power plants aims at reaching an irreversible state in the decommissioning process and eliminating the major source of radiological hazard.

Before the Union financial support will be provided, Bulgaria, Slovakia and Lithuania will have to meet certain conditions:

• EU legislation on nuclear safety and on the management of nuclear waste has to be fully implemented.

• The Member States have to create legal frameworks for the timely accumulation of national financial resources to cover the remaining financial needs. This will make sure that the Member States will be able to gradually take over the necessary financing responsibilities.

• Revised detailed decommissioning plans have to be submitted to the Commission. Those plans will be the basis for monitoring the implementation of the financial assistance from the Union.

Nuclear energy a ‘must’ for a sustainable energy mix

Including nuclear energy into a country’s energy mix is the best way to ensure a sustainable energy production, claims a report by the World Energy Council released a couple of weeks ago only.

The report – Policies for the future: 2011 Assessment of country energy and climate policies – starts from ranking countries according to how well they perform in the three pillars of energy policy: energy security, environment and affordability. The bad news, for all anti-nuclear activists, is that the best performers are those who have a good share of nuclear energy in their own energy mix: Switzerland (40% nuclear for electricity), Sweden (40% nuclear), France (75% nuclear), Germany (30% nuclear prior to reactor shut down earlier this year) and Canada (15% nuclear). A clear sign that nuclear plants cannot be closed just like that – just because a Kanzlerin has no strength to counter a screaming and yelling Gruene minority, all references to germany and Angela merkel is actually wanted – if our goal is a coherent and robust energy policy with a sustainable world as final destination.

These results are based mainly on data for 2009-2010, and that is why they still take Germany into consideration. Thus, they do not reflect the effects of changes in policy caused by the Fukushima nuclear accident and recent political instability in North Africa and the Middle East. It is clear, however, that nuclear energy plays a prominent role in the electricity generation mix of all countries highlighted and that moving away from nuclear could impact their performance.

The report notes that focusing solely on reducing greenhouse gas emissions and relying on market mechanisms only is not enough to achieve sustainability. Industry and policy makers must continue to work towards "Ensuring a stable regulatory regime that supports a large volume of capital investments while allowing policy updates and revisions as necessa; Driving changes in energy systems at a pace that may be faster than markets alone will support; Stimulating an urgency to reduce carbon emissions and the policies to drive those changes, while building and maintaining support from consumers and citizens."

Speaking at a media event World Energy Council Chairman Pierre Gadonneix, stressed the importance that; "public policies must provide the market with robust frameworks and typically grant actors with: prices that reflect real costs, long-term visibility, an implicit or explicit carbon dioxide price, an assumed responsibility of states to develop and ensure safety and acceptance, as well as environmental standards."

EU President to talk to the UN General Assembly

The President of the European Council, Herman Van Rompuy, will address the UN
General Assembly in New York on 22 September.

On the eve of his departure, Herman Van Rompuy said: "It is a great honour for me to be
the first EU representative to address the gathering of world leaders at the UN. I am keen
to promote at the UN General Assembly the EU’s position on climate change, sustainable
development, the Arab Spring and the Middle East peace process and global
interdependence."

During his stay in New York from 20 to 23 September, President Van Rompuy will also
meet bilaterally with a number of other heads of state and deliver a speech at the New
York University school of law on the subject: "Europe and the United States: a
transatlantic dialogue".

A UN resolution adopted in May invites the EU to participate in the general debate of the
General Assembly and establishes the right for EU external representatives to present the
positions of the EU and its member states at the UN. According to the EU Treaty, it is the
President of the European Council that represents the EU at the level of heads of state, as is
the case in the UN General Assembly. Prior to this resolution, EU positions were expressed
through representatives of the rotating Council presidency at the UN General Assembly.

China putting its brand name on Europe

 

China is trying hard to put its brand name on the world’s economy. As much of the world is struggling with a very slow economic cycle or, as in the case of Europe, with a raging fnancial storm that threatens to destroy what was once a thriving continent, Asia is developing fast, with China opening the way to all other economies in the South East of the continent and South America trailing close.

The last blow to the West old leadership has come from Dalian, industrial area in China, where political and business leaders met for the World Economic Forum’s Annual Meeting of the New Champions 2011. In a panel discussion on Governing Global Growth: The New Context, participants launched a call for a globally coordinated action, needed to counter the ongoing economic crisis facing Europe and the United States and put the world’s economy back on a sustainable development path. And that, of course, should take place with China’s brand name well engraved on it.

As it usually happens, in the front line for the call were political and economical leaders from the area suffering the most for the economic and financial crisis consequences, and in the worst need for fresh money to tackle the moment.

Gordon Brown, Member of Parliament, and Prime Minister (2007-2010) of the United Kingdom, urged European and US leaders to follow up on Chinese Premier Wen Jiabao’s offer for China to do what it can to contribute to restoring global economic stability. Making a renewed call for a “global pact on growth” for a world economy that has become interdependent between the West and the rest, Brown said, “America and Europe have to reform and invest in infrastructure” while “India must open up markets more and China should consume more.”

Speaking for businesses and investors, Tidjane Thiam, Group Chief Executive, Prudential, United Kingdom, criticized political leaders for failing to present a credible plan of action to tackle Europe’s sovereign debt crisis. “Politicians are still operating in a world of hypocrisy and half-truths,” he said. “They’ve been punished many times by market reaction.” Yet he was optimistic about finding a way out, because politicians have at last begun to realize how serious the problem is and begun to make the right diagnosis.

George Yeo Yong-Boon, Minister of Foreign Affairs of Singapore (2004-2011), agreed but stressed that each country must restructure their own economies before seeking an international solution. “Transferring the pain of adjustment to the global system or to someone else is a disincentive to deep internal transformation that is needed in each country,” he said. It is also unrealistic to expect nations to pursue anything other than their own enlightened self-interest, he added. China will cooperate up to a point, but it will not consume more just to save other countries. And whatever happens to the global system, China and India will keep growing with hundreds of millions of their people joining the global middle class.

All three panellists noted that putting the global economy back on a sustainable growth path will take time but can be done. The shifting global power structure means only global thinking can dig the world economy out of the current mess. The alternative is stagnation, unemployment and protectionism for years to come.

Nuclear is here to stay

Worldwide use of nuclear energy will continue to grow despite the Fukushima Daiichi accident, Yukiya Amano, director general of the International Atomic Energy Agency (IAEA), told a meeting of its Board of Governors.

The number of operating nuclear reactors is expected to increase by 90-350 before the year 2030, compared to the current total of 432 reactors. The difference in projections mirror the problems the nuclear energy industry is facing, with many countries still at a standstill, waiting to understand if the expected technological progresses will answer all security isues.If they all should start – or restart, depending on the individual situation – their nuclear programs, the maximum expansion of 350 new reactors might be reached.

“This represents continuous and significant growth in the use of nuclear power, but at a slower growth rate than in our previous projections” Amano told the board of governors.

Most of this growth will occur in countries already operating nuclear power plants, especially in Asia. The two giants, China and India will remain the main centers of expansion and their nuclear power capacities by 2030 are expected to be as projected before the accident, after a temporary period of slower growth.

According to Amano, interest remains strong in countries considering introducing nuclear energy, as the factors that contributed to increasing interest in nuclear energy before the accident have not changed: increasing global demand for energy; concerns about climate change; dwindling reserves of oil and gas; and uncertainty of supply of fossil fuels.

In order to relaunch the nuclear energy market, though, strong and quick improvements in nuclear safety are needed to restore public confidence in nuclear power.

Amano said that the IAEA has been continuing its work to set up a low-enriched uranium (LEU) bank and in May invited expressions of interest from member states willing to host such a bank. In July, Kazakhstan offered two sites for consideration, which an IAEA technical mission visited in August to review the offer. “We are discussing relevant technical matters with the government of Kazakhstan with a view to finalizing a decision on a site,” he told the board.

Carbon sinking might cause earthquakes

Storing carbon dioxide in underground reservoirs – carbon sinks, as they are commonly referred to – might help fighting climate changes and global warming, as many claim, but it might as well trigger  earthquakes, a new study suggests.

Scientists from the Lawrence Berkeley National Laboratory in California and the Côte d’Azur Observatory in France simulated what would happen if carbon dioxide entered an underground reservoir with a common kind of fault nearby. Depending on how and when the injection was done, an earthquake of up to magnitude 4.5 could occur, the team reports in a paper to appear in Geophysical Research Letters.

Carbon sinking is supported by many in the radical environmentalist front as a way to counter accumulation of this gas in the atmosphere and help fight the increase in the planet’s temperatures, with all undesirable consequences. The tool does not meet everybody’s favor, though: several organizations, environmentalists and scientists, indeed, claim there is no scientific evidence that storing Co2 in underground reservoirs would be any help against climate changes and that the tool would actually have a cost a lot higher than its expected benefits.

The joint USA-France study adds another possible problem, with sinking carbon dioxide underground. One exploration, geothermal and other companies are interested in the most. They want to understand, indeed, the conditions under which injections of CO2 underground can cause problems, or even threats, to mining, or any their form of exploitation of the planet underground. Included, of course, the occurrence of earthquakes. The study findings seem to support their doubts.