MEPs to back ambitious common corporate tax plan

Report calls for short transition period.
MEPs are expected to put further pressure on member states to reach an agreement on plans for a common consolidated tax base (CCCTB) at next week’s meeting of the European Parliament’s plenary in Strasbourg.

The issue is still deadlocked in the Council of Ministers, with several countries refusing to approve the plan, but MEPs are expected to vote in favour of the proposal on Wednesday (18 April).

Members of the Parliament’s economic and monetary affairs committee, which voted on the issue on 21 March, expressed support for the plan and called for it to be more ambitious than the European Commission had initially proposed.

MEPs are expected to back a report drawn up by Marianne Thyssen, a Belgian centre-right MEP, which says that a single set of rules for an EU-wide tax base should be obligatory for all companies after a short period of transition.

Two years after the law comes into force, all cross-border European co-operative societies would have to take part. After five years it would be compulsory for all companies apart from small and medium-sized enterprises.

Under the Commission’s plan, put forward by Algirdas Šemeta, the European commissioner for taxation, in March last year, firms would be allowed to opt to remain under the corporate tax structure of the country where they are based, as is the case now.

However, opting into the EU-wide tax base would allow them to file a single tax return in the member state where their headquarters are housed. This could allow the company to consolidate its losses in one member state against the profits made in another.

Flexible system

By supporting the more ambitious approach, MEPs would put themselves at odds with Šemeta, who said last month that he still supported a more flexible system.

When he spoke to the Parliament’s economic and monetary affairs committee on 20 March he said that an optional scheme was better because not all companies operated in more than one country.

The Parliament must be fully consulted on the proposal but it does not share full co-decision powers with the Council of Ministers. Furthermore, member states must agree unanimously before the plan can become law across the EU. When the Commission brought out its proposal last year eight countries – Bulgaria, Ireland, the Netherlands, Malta, Poland, Romania, Sweden and the UK – announced their opposition, although in July, Ireland said it would “participate constructively” in talks in return for the lowering of the interest rate on its bail-out loans.

The proposal could yet be advanced by enhanced co-operation – where a smaller number of member states decide to go it alone. Šemeta confirmed that it was an option when he appeared before the Parliament last month.

CCCTB does not fix the rate of tax directly – this, the Commission insisted when it brought the plan forward, should remain an issue of national sovereignty – but rather harmonises the tax ‘base’ from which the tax liability is calculated.