Irish FM Criticizes EU’s BEPS Response
Irish Finance Minister Michael Noonan has criticized the EU’s proposals for a common consolidated corporate tax base (CCCTB) and public country-by-country (CbC) reporting as “against the BEPS consensus.”
In a speech to an event on corporation tax, Noonan said that the consensus over the OECD’s BEPS proposals must hold and that the EU should continue to focus on implementing the OECD’s recommendations. He welcomed the European Commission’s plans for improving dispute resolution and requiring the mandatory disclosure of aggressive tax schemes.
However, Noonan also urged that “where EU action moves away from the BEPS consensus, caution is needed.”
In particular, he warned that “no country can implement two competing philosophies on how companies should be taxed.” He argued that the Commission’s proposal for a CCCTB “would see a move away from the arm’s length principle towards allocating profits by formula,” and noted that “this idea was rejected by the BEPS process in favor of stronger, more modern transfer pricing rules.”
Noonan also suggested that the Commission’s proposal for public CbC reporting “goes against the BEPS consensus that the value of these reports is in enabling tax authorities to see what is really happening and carry out more informed audits and assessments.” He said that other, non-EU countries have indicated that “any public reporting requirement could result in them no longer sharing the country-by-country reports filed with their tax authorities.”
According to Noonan, a consistent global approach must be taken on this and other issues.
“There is a danger that proposals for any reforms that are inconsistent with the BEPS recommendations could create a backwards momentum – countries may not take the vitally important step of implementing what has already been agreed and which they had committed to implementing. In the worst cases we could even see countries abandoning positive processes they had only recently begun implementing,” he said.
