EC presents plan to fight corporate tax avoidance
by Kylene Casanova
The European Commission yesterday presented its action plan for fairer corporate taxation, suggesting that the fight against corporate tax avoidance is a problem the Commission is taking seriously. The plan includes several key strategies to introduce harmonised corporate tax rules throughout the EU. The EC's statement on the action plan said: “Collectively, these measures will significantly improve the corporate tax environment in the EU, making it fairer, more efficient and more growth-friendly.”
The action plan's five key strategies are:
- Re-launching the Common Consolidated Corporate Tax Base (CCCTB). The EC first launched the CCCTB – which proposes a common system for calculating the tax base of businesses operating in the EU – in March 2011. However, some member states didn't support the idea. It says its new step-by-step approach to the CCCTB will provide fresh momentum to the proposal.
- Ensuring fair taxation where profits are generated, on the basis that profits should be taxed where they are generated.
- Creating a better business environment by introducing tax measures to make the Single Market simpler and more attractive for business, with more fiscal stability, legal certainty and simpler administration.
- Increasing transparency, seeing as tax transparency leads to fairer taxation and helps countries better tackle abuse.
- Improving EU coordination, because cooperation between EU member states is essential to successfully tackle tax avoidance.
Pierre Moscovici, Commissioner for Economic and Financial Affairs, Taxation and Customs, said: “Corporate taxation in the EU needs radical reform. In the interests of growth, competitiveness and fairness, Member States need to pull together and everyone must pay their fair share. The Commission has today laid the foundation for a new approach to corporate taxation in the EU. Member States must now build on it.”
The measures outlined yesterday by the EC in particular target what it calls the “uncoordinated national measures”, which are being exploited by some companies to escape taxation in the EU. It adds: “This leads to significant revenue losses for member states, a heavier tax burden for citizens and competitive distortions for businesses that pay their share.”
Public consultation on corporate tax transparency in the EU
Yesterday the EC also launched a public consultation on corporate tax transparency in the EU. It aims to find out whether mandatory disclosure of tax payment data for companies could help tackle tax avoidance and aggressive tax practices in the EU. For instance, companies could be required to disclose the taxes they pay, in every country where they operate.
The consultation can be seen here and will close on 9 September 2015.
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