Business World

Wednesday 26 October 2016

Ireland in focus as EU proposes common tax base for multinationals - again

Published 17/06/2015 | 14:04


EU is set to have a second go as it tries to tackle the low-tax arrangements of some states, including Ireland, that have benefited the likes of Amazon, Starbucks and Apple.

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The EU's executive European Commission has set out plans for a so-called common consolidated corporate tax base (CCCTB), after its previous attempt met member state opposition to what many saw as a first step to harmonising tax rates, still regarded as a sovereign issue.

Yet corporate taxes have remained in the headlines because of the way multinationals can legally reduce their bills by basing themselves in low-tax centres and the EU is already investigating the tax arrangements of Apple in Ireland, Starbucks in the Netherlands as well as Amazon and Fiat in the Luxembourg.

It said on June 11 those investigations are at an advanced stage and decisions could be announced in coming months.

In a paper, the Commission says its first CCCTB proposal in 2011 was for an optional system, which limited its effectiveness as a tool for preventing profit shifting by cross-border companies.

"The Commission will therefore work on a proposal to make the CCCTB compulsory, at least for multinational enterprises," it says in the document seen by Reuters, which could still face last-minute changes ahead of publication.

The plans are designed to prevent "aggressive" tax planning, such as artificially shifting profits to the country where rates are lowest or beneficial tax rulings can be secured.

Chas Roy-Chowdhury, head of taxation at accounting body ACCA, said the plan would likely end up in the form of enhanced cooperation.

"The main thing is to make sure that any CCCTB tax regime is fully compatible with global initiatives and that we need as many member states involved as possible," Roy-Chowdhury said.

The Commission says it would advocate a step by step approach. "The primary focus should be on securing the common tax base," the document said.

"The Commission will present a new legislative proposal as soon as possible ... introducing the mandatory element and providing for a staged approach to the CCCTB."

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