Europe’s biggest business group rejects pan-European tax system
Europe’s biggest business lobby group has withdrawn its support from a pan-European tax system at the heart of a planned crackdown on corporate tax avoidance.
BusinessEurope said plans for a “common consolidated corporate tax base” (CCCTB) no longer carried its backing after the European Commission said multinationals would be forced to sign up to the measure.
Pierre Moscovici, a commissioner, said the plans unveiled in Brussels on Wednesday laid the foundation for a new approach to corporate taxation in the EU. He said: “Corporate taxation in the EU needs radical reform.”
But some campaigners and politicians said the proposals did not go far enough. Oxfam, the charity, said: “These watered down, vague plans are a wasted opportunity by the European Commission to really tackle corporate tax dodging.”
The commission described its proposals to overhaul corporate taxation in Europe as “ambitious yet realistic.” As well as the proposed CCCTB, it launched a consultation over whether more corporate tax information should be made public.
It also published a list of the 30 tax havens that appeared most often on EU blacklists, which it described as “an important first step towards creating a more cohesive EU strategy towards non-co-operative tax jurisdictions”.
The commission said it would take a step-by-step approach to introducing the CCCTB under which member states would be asked to agree a common tax base before introducing consolidation as a second step. The delay in introducing the consolidated element of the plan is a recognition of the difficulty in negotiating a formula that could be used to divide up corporate profits between countries.
Emma Marcegaglia, president of BusinessEurope, said: “We have always been clear that to maintain the support of the business community, the CCCTB must both be optional for companies and encourage them to expand into new markets within the EU by allowing consolidation of profit and losses in different EU member states.”
The commission said that earlier proposals for a CCCTB were optional for companies as the main focus was on simplifying the tax system. But since then, the CCCTB’s potential as an anti-avoidance tool that would eliminate the mismatches and loopholes between national systems had been more widely recognised, resulting in a need to make it mandatory.
The launch of the commission’s action plan coincided with the publication of a report on Walmart, the retailer, by Americans for Tax Fairness, a US campaign group. It called on Brussels to investigate whether Walmart had received tax benefits in Luxembourg that constituted illegal state aid, after calculating that it paid less than 1 per cent in tax to Luxembourg on $1.3bn of profits between 2010 and 2013. The company did not immediately respond to a request for comment.
Molly Scott Cato, a Green member of the European parliament, said that the report showed the importance of EU moves to close tax loopholes. “While Walmart dodge billions worth in taxes, governments struggle to fund the basics needed for a civilised society such as education and healthcare,” she said.
Philippe Lamberts, another Green MEP, said the UK and Ireland were doing their best to sap the commission’s resolve on the CCCTB. The UK has already said it did not intend to take part.
Chas Roy-Chowdhury, head of taxation at ACCA, an accountancy body, said it was optimistic to describe the CCCTB as a “holistic solution” to profit shifting.