European Union finance chiefs are set to approve the design of a financial-transaction tax for a group of interested nations.
Ministers meeting in Brussels are “expecting to take a decision to move forward, on an enhanced cooperation basis, the financial transaction tax,” said Irish Finance Minister Michael Noonan in a statement. Ireland took up the EU’s rotating administrative presidency this month and will coordinate meetings among nations even though it does not plan to join the tax.
Once the ministers give the green light to a transaction tax for countries that volunteer, the European Commission will be able to move ahead with technical work. Nations don’t have to commit to adopting the tax plan until its design is set.
The new initiative will be based on a prior transaction-tax proposal for all 27 EU nations that failed to gain support. That plan aimed to tax a wide range of instruments including stocks, bonds and derivatives, in an effort to raise revenue and discourage speculative high-frequency trades.
If the new proposal comes together and takes effect by Jan. 1, 2014, it would be a “huge ask” for companies to get prepared in such a short time, particularly given transaction tax regimes already planned in France, Italy and other nations, said Mark Persnoff, a tax partner at Ernst & Young in London.
“One of the industry’s key concerns is timing,” Persnoff said. “Firms will have to work to an extremely aggressive timetable to get their systems ready. Firms are already struggling with a myriad of regulatory changes.”
Countries that have signed on to the transaction-tax plan include Belgium, Germany, Estonia, Greece, Spain, France, Italy, Austria, Portugal, Slovenia and Slovakia. Once the commission receives the go-ahead, it can put forward details of the proposal, which will require unanimous support from participating nations before it goes into force.