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October 25, 2016updated 15 Jan 2021 11:51am

Profession’s calls for tax harmonisation successful as Common Consolidated Corporate Tax Base (CCCTB) relaunched

By Vincent Huck

The European Commission (EC) has announced it will revive plans to set up a Europe-wide corporate tax base. The announcement comes only a few weeks after the Commissioner for Economic and Financial Affairs, Taxation and Customs, Pierre Moscovici, received a proposal from six European professional accountancy bodies to move towards a harmonised corporate tax system in Europe.

During the opening ceremony of the 71st annual congress of the French professional body (Ordre des Experts-Comptables – OEC), held in Brussel at the beginning of October, the OEC along with three other professional bodies from two other EU member states, Italy and Germany launched a new European organisation: the European Tax Advisors Federation (ETAF).

As part of the ETAF launch, OEC president Philippe Arraou presented and handed to Moscovici a white paper for greater harmonisation of corporate tax in the EU. The white paper was designed and signed by the ETAF members as well as three other professional bodies from Spain, Portugal, and Belgium.

The white paper suggests that harmonisation of the EU corporate tax is a necessity due to the disloyal and unfair tax competition that exists between member states.

“We, professionals, believe that the common market can’t be built if there is not a minimum of convergence in our tax rules,” Arraou said. “To have competition between states through tax is against the spirit of the common market, and that is why we believe that we need a minimum of rules whilst still respecting the national sovereignty of the member states.”

The white paper calls for modernising the tax system to be more in sync with the reality of today’s business transactions which are often dematerialised and digitalised. It also calls for greater convergence of the corporate tax bases and the corporate tax rates.

“These three points are linked and should be tackled at the same time, converging the tax rates without converging the tax bases would be useless,” Arraou explained.

To take into consideration the digitalisation of the economy is a priority, he continued:

“Because the reality today is that, in all legality, the big digital platforms are headquartered in tax heavens and are not taxed.

“It is unjust because it is a direct competition to traditional businesses that pay their taxes. We are helplessly witnessing the closure of small businesses, and of course, at the same time a gap in revenue to the states.”

The only possible action is on the international stage because all the states are concerned, Arraou concluded. “This is why we count on the European Union.”

CCCTB proposal relaunch Today, the European Commission (EC) announced plans to relaunch its Common Consolidated Corporate Tax Base (CCCTB) proposal.

The CCTB was first suggested in 2011 as a single set of EU corporation tax rules to work out company profits, but encountered resistance from member states, notably Ireland and the UK.

In June 2015 the EC announced plans to relaunch its proposal followed by a consultation that closed in 2016.

Back then the EC said:

“The CCCTB offers a holistic solution to the current problems with corporate taxation in the EU. It would greatly improve the business environment in the Single Market, by making it simpler and cheaper for companies to operate cross border.

“At the same time, it could serve as a powerful tool against corporate tax avoidance by removing the current mismatches between national systems and fixing common anti-avoidance provisions.”

In the agenda of EC president Jean-Claude Juncker is to chair a weekly meeting of the College of Commissioners in Strasbourg on Wednesday 26 October, when the College will discuss the Commission's proposal for a CCTB.

They will also discuss two further proposals that aim to improve the current system for dispute resolution on double taxation in the EU.

The EC said today key changes are that the new CCCTB will be mandatory (instead of optional) for large multinationals; and that there will be tax deductions for companies that invest in innovation and R&D (research and development).

In a statement Pierre Moscovici said today:

"Companies need simpler tax rules within the EU. At the same time, we need to drive forward our fight against tax avoidance, which is delivering real change. Finance Ministers should look at this ambitious and timely package with a fresh pair of eyes because it will create a robust tax system fit for the 21st century.”

The European Parliament said Moscovici is set to present MEPs the CCCTB proposals in the plenary chamber today at 18:30. 

However, Anders Dahlbeck, ActionAid tax policy adviser warned that the EC proposals don’t go far enough.

He said: “A common corporate tax system could be a positive step but it is a mistake for the EU to propose a two-step introduction. The risk is that we may never get to the second step and the first one will not provide the solutions we need.

“The essential first step for any effective reform to stop the race to the bottom on tax rates and tackle tax dodging is transparency. Europe should require big companies to publish how much tax they pay in every country where they do business, including in tax havens and in the world’s poorest countries. Public Country-by-Country Reporting can wait no longer.”

A leaked draft of a directive for a CCCTB was published by MNE Tax on 20 October.  

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