The Commission suggests that the term “Sustainable Finance” should be broadened to include the use of eu social taxonomy non-f margins and that they should be considered together with other forms of financial instruments in determining an appropriate rate of return. The Commission also sees the term as encompassing elements of social risk, environmental and governance risks, as well as financial stability and security risks. It goes on to state that these considerations are “due to consideration that share equity risk, as well as some credit risk” (I turning back on the screen to read an exchange service provider who puts it forward that shares could fall in value as a consequence of ill health).
The industry should avoid specifying eu social taxonomy rates of return alone, but rather focus on specifying a default rate or a reference rate that may or may not hold up to market expectations. The Commission is of the opinion that investors will become less cautious if there is a clearer reference rate than that of the market, as many doubt the ability of governments or institutions to live up to such a commitment.
The Commission also takes the view that tax regulation and disclosure requirements will need to be “weighted to a high degree in informing decision-making, so that the protection provided eu social taxonomy for by relevant EU policies and the taxing authority received from investor reporting standards can be enhanced.” In addition, while they notes that “tax authorities have varying experience in application of relevant policies based on a comprehensive view of their objectives, experience shows that effective disclosures can increase investor confidence and reduce tax evasion and avoidance.
“One of the areas in which comparisons are clear to see is real GDP growth. On the surface, the major G20 countries shared similar levels of GDP growth. But that is where the similarities to eu social taxonomy end. For example, in terms of per capita GDP growth, the UK and Germany have roughly equal rates. In contrast, for any GDP indicator the differences are considerable. In general, companies consider it a much harder task to hide their profits than to accurately forecast growth in their own. Simplifying their approach would permit them to better explain the results achieved, and, in this respect, make it harder for taxpayers to manipulate the results being recorded.
The example of the UK illustrates this. For a period of 2000-2007, UK companies have operated in a “mandatory reporting” eu social taxonomy system. Under this system, companies that achieve that highest standard are required by law to pass on to their investors all information concerning corporate tax rates, whereas those below that threshold do not. The Commission has long argued that for a business operating in this way to better pursue their core activities, the government should ensure that there is little fear that any detrimental tax impact could result from a higher than expected level of disclosure.
The Commission’s proposals are to increase transparency requirements on large companies, encourage full and timely disclosure eu social taxonomy at lower levels of tax and step up the appeal of disclosure standards for all companies operating in the European Union. Most significantly, the Commission would insist on a formula to calculate a standard percentage rate applied to the relevant economic sectors. An alternative calculation covering all companies in the EU, and applicable to all countries, would be preferable.
The Commission invites Member State jurisdictions to lead on this issue and to work towards building a Common Corporate Tax sight for all Member States, setting the base for eu social taxonomy rules in this respect. To the Commission’s credit the project appears to have wide appeal and has been endorsed strongly by the European Parliament.
The Commission has worked on a number of fronts to improve the disclosure requirements. It has seen some progress with respect to withholding tax obligations from certain subsidiaries. It’s also been relatively successful in forcing the transfer of EU income from branches to in- unexplained “tax havens”. There are still some jurisdictions with a poor eu social taxonomy reporting system, those jurisdictions are likely to need to close if any meaningful gradations are to be introduced.
The Commission has already targeted two priority sectors in respect to reporting as follows:o