The European Economic and Social Committee (EESC), a body advising the European Parliament, the European Commission and the Council, said that it endorsed proposals for a single set of rules governing a Common Consolidated Corporate Tax Base (CCCTB) based on an “equitable and balanced formula”.
The EESC said that it believes that the CCCTB, which aims at reducing differences in the tax systems of European Union member states and so reduce the use of aggressive tax planning by multinational companies, which in turn reduces member states’ tax revenue, “could generate benefits for companies, citizens and member states, if it delivers simplicity and certainty of corporate taxation on the one hand, and reduces tax barriers and complexity on the other,” the body, comprised of civil society representatives, said in an emailed statement.
“The EESC is the first institution to have adopted a position on the proposals and to make recommendations for a more effective and more achievable CCCTB,” the Committee, which adopted its opinion at a plenary session last month, said.
In March, the parliament’s committee for commerce, industry and tourism dismissed the European Commission’s proposals for more harmonised tax rates and practices in the EU and challenged its legal basis of its proposal which could potentially affect the operations of the business services sector such as law and accounting firms.
Michael Mc Loughlin, an Irish rapporteur of the EESC, said that the European Commission and EU member states should do more in finding a consensual way of quickly introducing the CCCTB and transposing it into national law.
“We understand the reasons behind the two-stage approach but we shouldn’t find ourselves in a situation where we do the first bit but not the second,” he was quoted as saying. “Thus, we ask for a seamless link between the two stages. The second stage must be introduced as soon as we have an agreement on a common base”.
McLoughlin acknowledged that issues like intellectual property, the value of which “is difficult to assess,” make the whole effort “more difficult” as companies use it as part of their aggressive tax planning strategy.
He added that the introduction of the CCCTB should not lead to unbalanced effects so that “smaller exporting member states should not lose substantial amounts of taxable icome to larger consuming ones”.
Further, in order to promote growth in member states, the Committee also recommends that the impact of the CCCTB on each member state with respect to investment attractiveness, job retention and creation, should be examined, even as overall benefits are expected.
“The CCCTB can represent a first step in a unified tax regime for all corporations in Europe,” Petru Sorin Dandea, a Romanian rapporteur said. “We really believe that it contributes to the ease of doing business. Companies will be able to develop their investment easily all over Europe because they don’t have to spend money on evaluating the tax regimes and policies in a new location, when they are trying to develop a new investment”.
Dandea advised that member states reforming their tax regimes “should shift the tax burden from labour to harmful financial or environmental practices and should avoid using tax rulings that are not justified by the economic substance of the transactions”.