The ‘common consolidated corporate tax base’ proposed by the European Commission does not comply with the principle of subsidiarity, according to a House of Commons resolution approved by MPs this week.
Justine Greening, the Economic Secretary to the Treasury, told MPs the government is committed to ‘ensuring that there is no further transfer of sovereignty or powers to the EU over the course of the Parliament’.
‘We will not agree to a proposal that might threaten or limit the UK’s ability to shape its own tax policy,’ she said.
Greening indicated that the government would challenge the substance of the CCCTB proposal, as well as raising objections to the fundamental principles underlying it. It was resolved:
‘That this House considers that the Draft Directive to introduce a Common Consolidated Corporate Tax Base (European Union Document No. 7263/11) does not comply with the principle of subsidiarity, for the reasons set out in chapter 2 of the Twenty-seventh Report of the European Scrutiny Committee (HC 428-xxv); and, in accordance with Article 6 of the Protocol on the application of the principles of subsidiarity and proportionality, instructs the Clerk of the House to forward this reasoned opinion to the presidents of the European institutions.’
‘We are concerned about five matters – the basic justification for the proposal, its legal base and its actual legality, the detailed content of the proposal, subsidiarity and proportionality,’ it said.
The European Commission released the draft directive on a CCCTB in March, setting out a proposed optional 'one-stop-shop' system that would allow companies to consolidate all profits and losses arising across the EU and file a single tax return.
Campaigners welcomed the proposal, which was first advanced ten years ago, claiming that it would curb ‘abusive’ tax haven activity. Some argued that the CCCTB would reduce the ability of multinational groups to avoid tax through 'artificial' intra-group transactions.
During the debate on 11 May, Greening said discussions between the UK government and business were ongoing. ‘In general, it is fair to say that business has not been actively calling for this proposal. It is also fair to say that some businesses have welcomed it – in particular, the prospect of allowing for cross-border loss consolidation,’ she said.
‘However, some companies are stressing that their support depends on the optional nature of the proposal. An awful lot of others … have expressed concerns about the potential compliance and administrative costs, which are likely to be large for many companies, and the lack of certainty about how many aspects of the system would work – a concern that is shared by the government.’
The ‘common consolidated corporate tax base’ proposed by the European Commission does not comply with the principle of subsidiarity, according to a House of Commons resolution approved by MPs this week.
Justine Greening, the Economic Secretary to the Treasury, told MPs the government is committed to ‘ensuring that there is no further transfer of sovereignty or powers to the EU over the course of the Parliament’.
‘We will not agree to a proposal that might threaten or limit the UK’s ability to shape its own tax policy,’ she said.
Greening indicated that the government would challenge the substance of the CCCTB proposal, as well as raising objections to the fundamental principles underlying it. It was resolved:
‘That this House considers that the Draft Directive to introduce a Common Consolidated Corporate Tax Base (European Union Document No. 7263/11) does not comply with the principle of subsidiarity, for the reasons set out in chapter 2 of the Twenty-seventh Report of the European Scrutiny Committee (HC 428-xxv); and, in accordance with Article 6 of the Protocol on the application of the principles of subsidiarity and proportionality, instructs the Clerk of the House to forward this reasoned opinion to the presidents of the European institutions.’
‘We are concerned about five matters – the basic justification for the proposal, its legal base and its actual legality, the detailed content of the proposal, subsidiarity and proportionality,’ it said.
The European Commission released the draft directive on a CCCTB in March, setting out a proposed optional 'one-stop-shop' system that would allow companies to consolidate all profits and losses arising across the EU and file a single tax return.
Campaigners welcomed the proposal, which was first advanced ten years ago, claiming that it would curb ‘abusive’ tax haven activity. Some argued that the CCCTB would reduce the ability of multinational groups to avoid tax through 'artificial' intra-group transactions.
During the debate on 11 May, Greening said discussions between the UK government and business were ongoing. ‘In general, it is fair to say that business has not been actively calling for this proposal. It is also fair to say that some businesses have welcomed it – in particular, the prospect of allowing for cross-border loss consolidation,’ she said.
‘However, some companies are stressing that their support depends on the optional nature of the proposal. An awful lot of others … have expressed concerns about the potential compliance and administrative costs, which are likely to be large for many companies, and the lack of certainty about how many aspects of the system would work – a concern that is shared by the government.’
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