The Council of the European Union has published a draft resolution on a revised Code of Conduct for Business Taxation, which was discussed by the Code of Conduct Group (COCG) on 22 November 2021 and received broad support at the Working Party on Tax Questions (High Level) on 25 November 2021. Some of the key revisions include new provisions regarding the scope of harmful tax measures, including that "Preferential tax measures which provide for a significantly lower effective level of taxation, including zero taxation, than those levels which generally apply in the member state in question are to be regarded as potentially harmful and therefore covered by this code." It is also provided that when assessing whether such measures are harmful, account should be taken of, inter alia:

• Whether advantages are ring-fenced de facto or de jure from the domestic market, e.g., they are accorded only to non-residents or in respect of transactions carried out with non-residents, or they do not affect the national tax base; or
• Whether advantages are granted even without any real economic activity and substantial economic presence within the Member State offering such tax advantages; or
• Whether the rules for profit determination in respect of activities within a multinational group of companies departs from internationally accepted principles, notably the rules agreed upon within the OECD; or
• Whether the tax measures lack transparency, including where legal provisions are relaxed at administrative level in a non-transparent way.

The revised code also provides that "tax features of general application of a Member State, which create opportunities for double non-taxation or that can lead to the double or multiple use of tax benefits, in connection with the same expenses, amount of income or chain of transactions are to be regarded as potentially harmful and therefore covered by this code."

As drafted, the revised code will replace the current code with effect from 1 January 2022. However, certain aspects of the code will not apply until the date of application of the EU legislative act implementing the agreement concluded at the OECD Inclusive Framework on 8 October 2021 with regards to Pillar 2, but in any case, no later than 1 January 2023. This includes the provision regarding double non-taxation and multiple use of benefits as above, as well as requirements for Member State to notify other Member States of existing and proposed tax measures that may fall within the scope of the code.