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Semeta To Propose Common EU Tax Base

JohnLocke

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European Commissioner for Taxation Algirdas Šemeta has said that proposals for a common consolidated corporate tax base (CCCTB) for firms operating in the European Union are imminent.


Semeta told a conference on the Single Market in Brussels that he will issue plans for the CCCTB "very soon" and that these are intended to "improve the business environment" in the EU.



"What are these benefits? First, companies would only have to apply one set of tax rules and deal with only one tax administration across the EU. Second, an EU group of companies would no longer have to deal with the very burdensome transfer pricing compliance requirements of several different member states," Semeta informed the gathering.


The Tax Commissioner argued that the tax-related costs businesses bear when they operate cross border "are still far too high" and that the administrative burdens and compliance costs linked to having to deal with up to 27 different tax systems across Europe are "a serious obstacle to their expansion."



"Current estimates of these compliance costs are in the range of 3% of corporate income tax revenues; that is more than EUR12bn a year," he said.



Semeta stressed that the CCCTB "is not about harmonizing tax rates in Europe" and that member states would still have full responsibility for setting their corporate tax rates. Some member states, particulalry those defending low rates of corporate tax such as Ireland, remain to be convinced however.



Irish Businesses’ and Employers’ Confederation Director General, Danny McCoysaid last year that the CCCTB "would almost certainly lead to an increase in companies’ tax bills by transferring taxable profits to the regions with large populations."



"This would result in lower revenue from corporation profits in smaller countries, which could lead to other taxes being increased to offset this loss of revenue. It would effectively result in a transfer of resources from smaller countries to larger ones," he observed.


“In the case of Ireland, which exports the greater part of its output to the larger central economies of the EU, companies would see part of their profits apportioned to other higher-taxed member states such as Germany or France. These large countries have long been in favour of CCCTB as a first step towards tax harmonization," McCoy warned.



 

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