UK and International Tax news
EC Presents Action Plan For Corporate Taxation In The EU
Monday 29th June 2015
The European Commission has recently issued an Action Plan to fundamentally reform corporate taxation in the EU, including a series of initiatives to tackle tax avoidance, secure sustainable revenues and strengthen the Single Market for businesses.
Key initiatives include the relaunching of the Common Consolidated Corporate Tax Base (CCCTB) and a framework to ensure effective taxation where profits are generated. The EC is also to publish a first pan-EU list of third-country non-cooperative tax jurisdictions and launch a public consultation to assess whether companies should have to publicly disclose certain tax information.
The EC believes that the CCCTB can deliver on all fronts, significantly improving the Single Market for businesses, while also closing off opportunities for corporate tax avoidance. Negotiations have stalled on the EC’s 2011 proposal for a CCCTB. However, there is a general consensus that they need to be revived, given the major benefits that the CCCTB offers. Work will begin immediately on a new proposal to introduce a mandatory CCCTB through a step by step approach which should allow member states to make progress more quickly on securing the common taxable base. Consolidation will be introduced as a second step, as this has been the most difficult element in negotiations so far. The EC plans to present this new proposal in 2016.
The Action Plan sets out the path for effective taxation in the EU, which is the notion that companies should pay a fair share of tax in the country where they make their profits. This may be achieved without harmonising corporate tax rates across the EU. The EC proposes measures to close legislative loopholes, improve the transfer pricing system and implement stricter rules for preferential tax regimes, among other things. These initiatives should also help to advance the ongoing debate between member states to define and agree on an EU approach to effective taxation.
The Action Plan sets out the next steps for greater tax transparency, within the EU and with regard to third countries, which should build on measures already envisaged in the Tax Transparency Package, adopted in March 2015. A key element in the Package was a proposal for the automatic exchange of information on tax rulings, which received unanimous political support from Finance Ministers at the Informal ECOFIN in April. Member states are now discussing it at technical level with the aim of reaching agreement by the end of the year.
The EC has also launched a public consultation to gather feedback on whether companies should have to publicly disclose certain tax information, including through CbC Reporting.Contact Us