EU Company Taxation initiatives: it’s only the beginning!
For many years there were hardly any interesting EU discussions on taxation. And if there were, it concerned an endless debate on reduced VAT rates or vague ideas on the Common Consolidated Corporate Tax Base. There was - and still is - the unanimity rule. Member States were confident they could block any initiative from the Commission and thus that Commission was not extremely eager to invest in proposals that would end up in the drawer.
- First, it will propose a mandatory CCCTB. This would improve its capacity to prevent profit shifting; an optional system is unlikely to be used by companies that engage in aggressive tax planning to avoid taxes.
- Second, it will propose that the CCCTB is introduced through a step-by-step approach. This should make it more manageable for Member States to agree. The primary focus should be on securing the common tax base, starting with international elements related to BEPS. The Commission will propose to postpone the consolidation until after the common base has been implemented.
- First of all, it becomes more and more difficult for companies to stay on the side-lines. Multinational companies which have so far refused to cooperate with the Members of Parliament's Special Committee on Tax Rulings were already threatened with losing their accreditation to the European Parliament and the Commission. We would urge companies to have an internal debate and engage with their trade association to assess how to respond to the consultation and how to react to requests by policy makers
- Secondly, in the current climate it becomes more and more important to demonstrate by specific examples what the practical and unintended implications could be of some of the policy proposals. It is therefore important for companies to engage with the key EU policy makers.
- Finally, corporate taxation has become a major element in the reputation management of companies. Any communication on this topic should be carefully prepared, aligned with the compliance strategy but also reach the correct stakeholders that matter in this debate.