The EU Commission is looking to introduce a mandatory digital tax system to combat tax fraud and assist countries in overcoming the challenges associated with double taxation and withholding of taxes.
We identified the following problems as part of the EU consultation process:
- tax fraud
- lack of cross border investment
- inefficient withholding of tax relief and
- challenges resulting from Covid restrictions.
Based on our research we make the following recommendations:
Improving withholding tax refund procedures to make them more efficient
Digital taxation system will enhance the traceability of the wrong double taxation, and thus it will reduce the no of refund claims. The EU standardised forms and procedures could strengthen the predictability of the digital tax system.
Establishment of a fully-fledged common EU relief at source system
We agree with the commission's proposal on a standardised EU-wide system for withholding tax relief at source. Such policy will allow the countries to apply a correct withholding tax rate at the time of payment to a non-resident, which will mitigate the chances of double taxation.
Enhancing the existing administrative cooperation framework to verify entitlement to double tax convention benefits
A digital and centralised tax system will reduce the administrative burden created by the current paper-based process. Higher verification capacity will decrease the no of fraud cases related to labour-intensive cross-border taxation. By reducing paper-based lengthy process the commission will be able to generate a sustainable and environment-friendly system. Simplified and highly transparent taxation system will reduce tax fraud and will create a socio-economic impact to support the post-Covid growth of the world economy.
Our research provides a clear guideline to the policymakers supporting the president of the EU Commission to convert the proposal to a legal requirement.
Our research team
Peter Jelfs is Professor of Taxation at Brunel University, London. He has extensive experience of working as a business tax advisor for large accountancy and law firms, as well as for UK government departments, including HM Revenue & Customs and the Department for International Trade. He has experience in managing withholding tax reclaims on behalf of clients.
Suman Lodh is Assistant Professor in Finance at Middlesex University, London. He is an expert in economic modelling and has extensive knowledge in analysing the big data generated by a digital system. His industry experience and research skill is an asset to the team.
Monomita Nandy is an Associate Professor in Accounting and Finance at Brunel University, London. She is well recognised in the research network for her excellent research skills to create a socio-economic impact in practice. She has experience in working with international policymakers and industry leaders.
Dr Monomita Nandy - Dr Monomita Nandy is currently a Professor in Accounting and Finance at Brunel Business School (BBS), Brunel University of London, UK. Prof Nandy has served as the Vice Dean International of the College of Business, Arts and Social Sciences, Director of Internationalisation, and Director of the Postgraduate Programme at Brunel Business School, alongside other leadership roles. She holds two PhDs, one from the University of Calcutta, India, and the other from the University of Rome Tor Vergata, Italy.
Prior to joining Brunel University, she held academic and research positions at Lally Business School, New York; Radboud University, the Netherlands; the University of Surrey, UK; and leading institutes in India. She is highly popular among students and has received student-led Best Teacher awards. She has also been recognised for her innovative and technology-led teaching.
Her research interests include interdisciplinary studies focused on digitalisation to achieve sustainable development goals, alongside her disciplinary research on emerging issues in Corporate Finance. Her research has been published in high-impact, international, peer-reviewed journals such as IJFE, JBE, TIJA, BSE, and others. She serves as an associate editor for leading journals, including IJFE, BSE, and IJFS, and regularly presents her research at major business and management conferences.
Her research has been highly regarded by institutions such as the UK Parliament, the Sustainability Board in India, St James Entrepreneur Club London, the Small Business Charter in the UK, and the Chartered Institute of Taxation in England. Prof Nandy conducts policy-relevant research and shares her expertise by participating in consultations initiated by the FRC, EU Commission, and HMRC. Her work frequently garners media attention.
She is the Chair of the South-East group of the British Accounting and Finance Association, Vice Chair for Research Engagement at EICBI, a member and champion of the IMA Technology Solutions & Practices (TSP) Committee (USA), a board member of the Centre for AI, and a Lab Leader at the Centre for Entrepreneurship and Sustainability at Brunel University of London. She also serves as a research advisor for companies in the UK and abroad, such as Qi Digital, UK, and Exergie, Nigeria.
Her research attracts external funding from businesses and funding bodies. Her university’s student-industry collaborations are recognised by the London Chamber of Commerce, and her partnerships with local businesses are highly appreciated by both the business community and local authorities. Moreover, her research generates significant social impact, contributing to the sustainable growth of the economy with long-term socio-economic benefits.