Financial Audit in an Uncertain Economic Environment – EURACTIV.com

Financial Audit in an Uncertain Economic Environment - EURACTIV.com

The economic policy agenda for the coming year will be full of discussions on EU tax laws, tax policies, minimum wages and monetary regulations.

At the same time, EU trade policy needs to adapt its traditional openness to greater EU resilience as well as more sustainable and socially responsible activities.

The Kovid-19 epidemic and its economic collapse and the resulting inflation may quickly change the group’s political priorities.

Budget rules

In October 2020, the European Commission launched a review of the EU’s economic governance framework. The most controversial parts of this framework are, among other things, the finance laws governing the amount of public debt that member states can incur and the annual budget deficit limit.

These laws will not apply until the end of 2022 due to the general humiliation clause that was activated at the beginning of the Pandemic, but will come into force again in 2023. With the 2023 budget set for 2022, the European Commission is expected to provide its guidance in the first quarter of 2022.

The previous German government was a strong supporter of austerity, but the position of the new coalition government is not yet clear. Liberal leader Christian Lindener, Germany’s new finance minister, has previously criticized southern European monetary policy, but began his term on a more conciliatory note.

Similarly, the new Dutch government, once a strong advocate of austerity, seems a little more willing to spend public money, at least nationally.

However, even with these signs pointing to a more favorable climate for monetary policy, the reform will be difficult to accept. In the absence of an agreement to reform tax rules, national budgets in 2023 will have to find a temporary solution.

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At the same time, by 2022, member states will receive substantial sums from the stimulus fund. How these funds will be used and the member states that benefit most from these grants may influence the mutual trust of EU governments in negotiating tax laws.

Taxes

2021 marked the historic OECD tax treaty aimed at tackling tax competition between businesses. And marked Pandora Papers , Which revealed tax evasion around the world. 2022 will determine whether this agreement can be respected by all.

In December 2021, the Commission announced its intention to implement the corporate minimum tax through a proposal and hoped that the governments of the member states and the European Parliament would reach an agreement in the first semester of 2022.

However, since Estonia, Hungary and Ireland have temporarily ratified the tax treaty, the proposal requires the unanimous approval of all member state governments.

At the same time, the political difficulties facing US President Joe Biden cast doubt on the implementation of another part of the OECD tax deal, in which the tax rights of large and high-profit companies will be rebuilt out of their jurisdiction. Headquarters is where their income comes from.

Not sure if all EU member states still want to implement the tax agreement, unless the US is sure it does. A proposal to implement the redistribution of tax rights at the European level, based on the performance of companies, should be introduced in July 2022.

In addition, in response to such scamsPandora Papers,The European Commission recently announced that it will introduce a proposal in 2022 to deal with tax havens outside the EU. Like the new directive against shell companies, it targets shell companies that are used to conceal assets outside the EU’s jurisdiction. European Courts.

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Minimum wage

One of the main goals of the French presidency of the Council of the European Union in the first half of 2022 is to reach an agreement on the minimum wage proposal.

The recommendation of the European Commission in 2020 aims to ensure that the statutory minimum wage is high enough, that is, that they represent at least 60% of the average wage in the member country concerned. However, the proposal does not compel member states to introduce a statutory minimum wage if they do not already have a minimum wage.

In addition, the proposal aims to increase the scope of collective bargaining.

By the end of 2021, the European Parliament and the Council of the European Union have agreed to a negotiated position, and in the first months of 2022, the French presidency will seek to find a compromise.

However, we can expect resistance from Denmark and Sweden, two member states that want to free their labor markets from EU influence.

Towards a more responsible and secure trade policy?

By mid-February 2022, the Commission plans to announce a proposal to mandate sustainable corporate governance for EU companies. This proposal should make companies responsible for ensuring that their distribution network respects human rights and environmental standards.

However, the proposal was first announced for the summer of 2021, after which it was postponed, first to October and then to December 2021. Therefore, the new communication date should not be considered as a deadline for the Commission to present its proposal.

At the same time, the EU seeks to respond to third countries that seek to use economic interdependence to force European countries to comply with their demands. The latest example is the Chinese government’s pressure on Lithuania to support Taiwan’s independence.

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In December 2021, the Commission proposed a new tool that would give the EU executive the right to take swift defensive action in the face of third-party compulsory action.

Therefore, 2022 will be marked by an active debate on this issue between member states that fear that this tool will lead to a protective attitude on the part of the EU and those who see it as an important step geographically towards further EU. Reliable.

Financial restrictions

In 2022, by the end of 2021, there will be legislative discussions on the regulatory recommendations to be presented by the Commission. Among them, we find updates on capital requirements for insurance companies (Solvency II) and banks (Basel III).

In addition, the Commission is expected to present proposals to strengthen the European financial markets. A premium proposal to reduce debt / equity polarization (DEBRA) is expected to be introduced in April, with the aim of financing European companies through equity contributions.

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