EU kicks off second attempt at common company tax base
By Huw Jones
LONDON (Reuters) - The European Union has kicked off its second attempt in four years to introduce a common method for cross-border companies to calculate their taxes to cut costs and crack down on tax avoidance.
The bloc's executive Commission launched a public consultation on Thursday, saying it wanted to identify key measures for inclusion in its re-launch of a common consolidated corporate tax base or CCCTB plan.
The aim is to allow cross-border companies to comply with just one system for filing taxes to avoid the cost of filing under different national systems.
The initial proposal in 2011, after a decade of deliberation, hit a wall as several countries including Britain and Ireland, opposed it. They feared it could usher in a common tax rate and said the mechanism for sharing out profits was faulty.
This time round the Commission is proposing a mandatory rather than an optional reform, but in two stages in a bid to make it more politically palatable, starting with a common corporate tax base for computing taxes.
This would be followed by including consolidation or the pooling of tax results from a company's operations across the EU so that losses are offset.
Between the two stages, there could be a method for giving companies temporary cross-border loss relief, the Commission said.
The Commission is also emphasising this time how the reform could ensure big firms pay their fair share of tax.
"I remain convinced that the CCCTB is the best instrument for fighting cross-border tax abuse and tax fraud and for easing the administrative burden on companies operating in the EU," EU Tax Commissioner Pierre Moscovici said in a statement.
Chas Roy-Chowdhury, head of tax at the ACCA, an accounting body in London, said the proposal will face the same problem as before: getting the backing of all 28 EU states would be a huge accomplishment.
Unanimity is needed among the EU's member states to adopt new tax rules, a difficult hurdle to leap given the topic's political sensitivity.
"We consider however that the enhanced cooperation-based system will be the ultimate outcome," Roy-Chowdhury said, referring to when a group of EU states goes it alone with a policy.
The Commission's consultation also looks at ways to end the current system whereby a company raising finance by issuing bonds pays less tax than if it raised money by issuing shares.
(Reporting by Huw Jones; editing by Adrian Croft)
