Exclusive: “No incentive to opt in to CCCTB” – Vodafone
In an exclusive interview with International Tax Review, John Connors, director of tax strategy and policy at Vodafone, the world’s largest mobile telecommunications company, described the Common Consolidated Corporate Tax Base (CCCTB) as unviable and undesirable.
The European Commission announced its proposals for a CCCTB in March with the aim to introduce a single set of rules that companies operating within the EU can use to calculate their taxable profits. The CCCTB would be optional for groups, but those which choose to use it would be able to file one consolidated tax return for their entire activity in the EU instead of filing separately in each country.
“The CCCTB will make it easier, cheaper and more convenient to do business in the EU,” said Algirdas Semeta, Commissioner for Taxation, Customs Union, Audit and Anti-Fraud when he introduced the plan. “Today's proposal is good for business and good for the EU's global competitiveness.”
Not everyone agrees however. While many companies are enthusiastic about the CCCTB’s potential benefits, Vodafone has today added its name to the list of those who would opt out.
“I can’t see any incentive for us or other multinationals to opt into the CCCTB,” said Connors.
Connors believes that the CCCTB is seen as an irrelevance in the development of international tax thinking.
“For us, competition between companies and between governments is a good thing,” Connors said. “It drives efficiency.”
Connors argues that the CCCTB, whether on a voluntary basis or not, would drive against that efficiency by adding an extra layer of complexity.
“You have 27 EU member states, each with their own tax systems, here’s a 28th that could sit alongside that,” said Connors. “I’m not quite sure how the allocation keys [would] operate to divide up profits between high labour cost countries.”
Within two months of the Commission’s proposals, nine EU member states, including the UK, where Vodafone is headquartered, raised their opposition to the CCCTB on the grounds of subsidiarity, the doctrine that holds that the EU can only make laws that cannot be made by member states alone. It was a move that showed just how politically difficult the common tax base will be to implement, a fact noted by Connors.
“While we keep a watching brief on it, I think politically it’s going to be very difficult to take forward in the EU,” Connors said. “It’s probably slightly more relevant in Eurozone countries. But I don’t see anything happening anytime soon.”
“To be honest, we’ve not spent any deal of time looking at it as anything viable or desirable,” Connors added.
Look out for the full in-depth interview with John Connors next week.