EU to revive common tax base plan, propose binding corporate tax rules
Reforms to corporate tax rules and fiscal transparency will be pursued by EU policy makers in 2016, the EU’s tax commissioner Pierre Moscovici has said.
“We have a serious problem with tax avoidance and lack of transparency. Too many people have looked the other way,” Moscovici said.
Moscovici told a European Parliament committee that he will present an anti-tax avoidance package by the end of January. This will include plans for a consolidated common corporate tax base (CCCTB), he said, with the first phase of work on developing a common corporate tax base with consolidation following on in phase two.
Work on the BEPS (base erosion and profit shifting) directive will begin at the end of January, Moscovici said, “as for that we have already agreement at the level of the G20 and OECD”.
G20 leaders agreed to implement the OECD’s BEPS project in November. BEPS refers to the shifting of profits of multinational groups to low tax jurisdictions and the exploitation of mismatches between different tax systems so that little or no tax is paid. Following international recognition that the international tax system needed to be reformed to prevent BEPS, the G20 asked the OECD to recommend possible solutions. In July 2013, the OECD published a 15 point Action Plan and the final reports were published in October 2015.
The European Commission wants to go further and be more ambitious than the current BEPS plans, Moscovici said.
Moscovici admitted that there are no figures available on the real scale of tax avoidance in the EU or OECD, or how BEPS might help. This is “astonishing”, said tax expert Heather Self of Pinsent Masons, the law firm behind Out-Law.com.
“BEPS is a hugely ambitious project and there are risks that implementation will cause huge uncertainty for business,” Self said. “It is helpful that the EU wants to take a co-ordinated approach, but very worrying that they are ambitious to go beyond the scope of BEPS at this stage.”
“However, the commissioner’s admission that there are ‘no figures regarding the real scale of tax avoidance’ is astonishing. It is surely important that the problems are properly defined before any attempt is made to bring in significant new measures; otherwise there is a risk that the real burdens on compliant businesses will far exceed the potential gains from targeting avoidance,” she said.
