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Common corporate tax base should be compulsory for large groups, say MEPs

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A common consolidated corporate tax base should be compulsory for all companies except SMEs after a transitional period, according to a resolution of the European Parliament approved last month by 452 votes to 172, with 36 abstentions.

The Parliament approved a European Commission proposal for a Council Directive on a CCCTB, which would provide a single set of rules for calculating taxable profits but would not impose common tax rates. EU tax commissioner Algirdas Šemeta welcomed the Parliament's ‘very strong support’ for the proposal. It would save EU businesses billions of euros and help attract more foreign investors into Europe, he said. Businesses had been calling for the CCCTB to be introduced ‘as quickly as possible’.

George Bull, Senior Tax Partner at Baker Tilly, said that making the regime obligatory for large groups would remove one of the objections to the CCCTB, that ‘far from simplifying European tax compliance, a voluntary system would have added complexity by creating a 28th, transnational alternative’.

He added: ‘Many groups may welcome the promise of only having to prepare a single EU tax computation, based on a single set of common EU tax rules – for those member states that adopt the CCCTB, at any rate. Tax computations based on national tax rules will still have to be prepared for those member states that do not adopt the CCCTB, but there could still be a significant reduction in the tax compliance burden for groups with branches or subsidiaries in most, or all, EU member states.’

But there would be difficulties surrounding the interaction between those territories that applied the CCCTB and those that did not, he said.

Eurodad, the European Network on Debt and Development, said a compulsory CCCTB would be ‘a major step in the fight against transfer pricing abuse, ensuring more income is taxed where it is actually made’.