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Economic and Financial Affairs Council (ECOFIN)

The Economic and Financial Affairs Council was held on 5 June in Luxembourg. The UK was represented by the Economic Secretary to the Treasury. The items discussed were as follows: Implementation of the Stability and Growth Pact: Excessive Deficit Procedures The Commission presented its proposal to abrogate the Excessive Deficit Procedures on Malta, Germany and Greece. Ministers agreed Conclusions supporting the abrogation of the EDPs. Convergence Reports by the Commission and the European Central Bank The Commission and the European Central Bank presented their Convergence Reports on Cyprus and Malta, which conclude that both countries have met the Maastricht criteria for joining the euro. Ministers welcomed the Commission and ECB's conclusions, and agreed a letter to be sent to Heads of State and Government at the European Council on 21-22 June. The final decision on whether both countries will join the euro as planned on 1 January 2008 will be taken at ECOFIN on 10 July. Quality of Public Finances Ministers were presented a report on the efficiency and effectiveness of public finances, focusing in particular on the need to improve the measurement of public sector output. The Council adopted Conclusions supporting the report. Tax (a) Combating Tax Fraud Ministers agreed Council Conclusions on a range of measures to combat tax fraud, particularly in the field of VAT. The Conclusions covered work on conventional measures and more radical approaches, including a Commission study into the impact of a possible wide reverse charge. The UK supports efforts to combat VAT fraud, particularly work to improve current arrangements such as exchange of information and mutual assistance. (b) VAT Package Ministers agreed a package of VAT measures, subject to work on some technical issues which are to be resolved before the end of the forthcoming Portuguese Presidency. The UK welcomes this important work to modernise and simplify the existing VAT rules, particularly for cross border supplies of services. (c) Common Consolidated Corporate Tax Base Ministers held an exchange of views on the Commission's technical work on a CCCTB. The UK does not believe that the competitiveness of the EU would be helped by a harmonised company tax base and remains sceptical about both the principles and the practicalities. (d) Code of Conduct on Business Taxation The Council took note of a report from the Code Group on its work under the German Presidency to combat harmful tax competition. The UK supports the work of the Group. (e) Joint Transfer Pricing Forum Ministers agreed Conclusions welcoming the work of the Joint Transfer Pricing Forum. The UK agrees that the report's recommendations represent best practice, and broadly follows these standards already.