Monday 19 March 2018

EU will press ahead with its common corporate tax plan

European Commission tax director Valere Moutarlier
European Commission tax director Valere Moutarlier
Colm Kelpie

Colm Kelpie

A senior European Commission official has said Brussels will eventually press ahead with plans to introduce controversial corporate tax rules on how profits and losses are treated across countries.

Valere Moutarlier, the head of direct taxation at the European Commission, said the Commission still wants to pursue the contentious consolidation aspect of the CCCTB proposal.

"We want it to be implemented," he told the Irish Independent.

The so-called Common Consolidated Corporate Tax Base (CCCTB) proposal was heavily debated a number of years ago and was intended to provide a single set of rules that companies operating within the EU could use to calculate their taxable profits.

The Commission announced last summer that it will present a revised CCCTB proposal by next year, which will be mandatory for multinationals.

But to assuage the concerns of member states toward the original proposal, Brussels said the revised plan will be implemented in stages, with the consolidation aspect - the most contentious from Ireland's point of view - delayed.

On a recent visit to Dublin, Mr Moutarlier said the consolidation aspect brings advantages.

"In terms of no more bothering of transfer pricing between EU member states, single returns, so there is a lot of benefits.

"The difficult point is once the tax base is consolidated, how do we reallocate the tax base between the member states."

Writing in this newspaper ahead of the announcement last summer, Peter Vale, tax partner at Grant Thornton, said a common tax base does not pose a threat to Ireland. But the introduction of a consolidated element would be a concern.

"The key drivers of how taxable profits would be allocated include capital, labour and sales," he wrote. "The benefits of our low rate would be lost as a small amount of taxable profits would be allocated here, with the bulk of the profits allocated to larger countries."

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