Tuesday 17 October 2017

Common tax base could lead to flight of investment

Peter Flanagan

Peter Flanagan

A COMMON consolidated corporate tax base (CCCTB) will lead to higher costs throughout Europe and could lead to scores of multinationals leaving the region for Asia, a leading tax expert has warned.

Irish Taxation Institute president Andrew Cullen said that new research by the institute showed the CCCTB could lead to a flight of foreign investment from Europe if implemented.

According to the ITI, the introduction of a CCCTB would lead to a 13pc increase in average compliance costs for companies in the EU while associated tax administration costs would outweigh the expected savings from a potentially reduced need for transfer pricing.

Costs

The majority of businesses found that their effective tax rates increased under a CCCTB and the costs of transitioning to a CCCTB were considered to be "very high", said the study.

"The EU is competing for investment in a global environment where certainty, return on investment and compliance costs are critical to multinational investment decisions. It is important that the EU assesses these proposals across all those variables," Mr Cullen said.

"Multinationals making major global investment decisions will seek out those regions with a competitive tax framework.The EU must ask itself if the introduction of a common tax base would deliver on those criteria or could the EU find itself in a position where it loses out to Asia and the Far East and other competitive regions.

"It would be unwise to reach a position where we could lose out to Switzerland and Singapore -- the EU's largest competitors for FDI (foreign direct investment)," added Mr Cullen.

Irish Independent

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