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European Commission consults on common consolidated corporate tax base proposal

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The European Commission is consulting until 8 January 2016 on a new proposal for a two-stage approach to implementing a common consolidated corporate tax base (CCCTB) in the EU. The EC’s strategy to relaunch its proposal for the CCCTB rests on the belief that companies operating across borders within the EU could benefit from a far simpler way to calculate their taxable profits.

Under a CCCTB, the EC says, businesses would have to comply with just one EU system for computing their taxable income, rather than the current situation where they have to comply with different rules in each member state in which they operate. This would involve first establishing the rules for the common corporate tax base (CCTB) before introducing consolidation, allowing member states to tax their share of the base at their own corporate tax rate.

The EC also aims to gather views on:

  • to what extent the CCCTB could function as an effective tool against aggressive tax planning, without compromising its initial objective of making the EU a more business-friendly environment;
  • which criteria should determine the companies that will be subject to the rules of a mandatory CCTB/CCCTB, and whether non-qualifying companies should still be given the possibility to opt for applying the common rules;
  •  whether the ‘staged’ approach, whereby priority will be given to agreeing the tax base before moving to consolidation, would be a preferable way forward;
  • whether, in the short-term, it would be useful to agree common rules for implementing certain international BEPS-related aspects of the common tax base based on the current proposal, until the Commission adopts the new (revised) CCTB/CCCTB proposal;
  • how the debt bias issue should be addressed;
  • which types of rules would best foster R&D activity; and
  • whether a cross-border loss relief mechanism aimed at balancing out the absence of the benefits of consolidation during the first step (CCTB) could help in keeping the business in the CCCTB.

Pierre Moscovici, EC commissioner for economic and financial affairs, taxation and customs, said: ‘I remain convinced that the CCCTB is the best instrument for fighting cross-border tax abuse and tax fraud and for easing the administrative burden on companies operating in the EU. We very much hope that the views collected in this public consultation will help us to present in 2016 a revised proposal that is balanced and beneficial to all.’

Chas Roy-Chowdhury, head of taxation at the ACCA, said: ‘We welcome the concept of CCCTB, but we need to be realistic about what is achievable. Whatever the outcome, we need to make sure it is a full consolidated system.’

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