After March's release of the European Commission's tax transparency package, June saw the follow-up launch of its Action Plan for Fair and Efficient Corporate Taxation, the main component of which was the relaunch of the common consolidated corporate tax base (CCCTB).
Pierre Moscovici, European tax commissioner, told International Tax Review in an exclusive interview in December that revisiting the CCCTB was one of his priorities for the year ahead.
The proposal for a bloc-wide set of rules has already been reviewed – and rejected – most recently in 2010-2011, when it failed to get off the ground because member states could not find a satisfactory way around the issue of ceding national tax sovereignty.
The Commission says the CCCTB can deliver "on all fronts" and bring benefits to all. Brussels thinks member states having their own corporate tax systems is contrary to the aims of a single market, but member states opposed to the plan in 2011 cited the principle of subsidiarity in response to this claim. The principle states that the union should only act if the objectives of the action can be better achieved at union level.
Moscovici has tweaked the Commission's approach this time in the hope of meeting less resistance from member states that place great value on tax sovereignty and competition – for example the UK and Ireland. The second 'C' – consolidation – proved one of the toughest hurdles to overcome last time around, so the new model proposes a step-by-step approach, first implementing a common corporate tax base (CCTB), with the consolidation element coming later.
Opposition will remain, however, with some stakeholders favouring greater levels of transparency in place of harmonisation, while those at the other end of the spectrum want the CCCTB to go further than proposed, by including a minimum European corporate tax rate, as well as minimum standards for double tax agreements.
Moscovici certainly has his hands full. The other priority area he identified in our December interview – the financial transaction tax – is among the topics discussed in this month's cover story; an exclusive interview with Sue Cooper, group head of tax at Schroders.
Companies with their principal tax residence outside the EU will also need to keep informed about these developments. The Commission has shown it is not afraid to extend the application of its tax rules to so-called third countries, while there may also be competitive advantages to be had if the EU harmonisation proposals become reality.
Matthew Gilleard
Editor, International Tax Review
mgilleard@euromoneyplc.com
