A plan to a create a harmonised corporate tax base for the 28 member states of the European Union has been called a “key area for action” by one of the European Commission’s top officials.
The Commission is moving forward with an attempt to introduce a common method for cross-border companies to calculate their taxes to prevent avoidance.
Plans for a common consolidated corporate tax base (CCCTB) could have major implications for Ireland’s multinational tax policies, which have helped attract firms such as Google, Apple and Facebook.
Pierre Moscovici, the commissioner for economic and financial affairs and taxation said that a CCCTB is a “key building block in the agenda for fairness, transparency and a truly single fiscal market”.
Mr Moscovici was speaking at a taxation workshop run by the economic and financial affairs directorate (ECFIN) in Brussels yesterday.
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“It will limit the opportunities to manipulate their tax position and provide a holistic approach,” he said.
“Frankly speaking, this project is of major importance for this Commission and we will dedicate a lot of our energy to try convince member states that we need it.”
The commissioner said that political will and courage were needed to see the CCCTB implemented.
First raised as a proposal in 2011, after a decade of deliberation, the tax initiative was abandoned after several countries, including Britain and Ireland, opposed it.
The Commission has made a number of changes to its original proposals, including a common corporate tax base, so that companies use a uniform methodology for calculating taxes across the region.
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The commission launched a public consultation on CCCTB earlier this month.
Last month Michael Noonan, the finance minister, said that he was willing to discuss the proposal but had “two red lines”, which were that setting the corporate tax rate should remain a matter for sovereign governments and that any change will require unanimity.
Earlier in the year, Enda Kenny said that if a new set of proposals were brought forward by the Commission the government would engage with them “constructively”. The taoiseach has previously described the CCCTB as “unworkable.”
Mr Moscovici also said yesterday that global taxation is now experiencing a revolution of transparency that “we must pursue with all of our energy”.
The commissioner said that the ECFIN council has adopted a directive on automatic exchange of information on taxation rulings.
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European countries are also set to introduce new reporting standards as part of a plan to bring in the biggest change in the way multinational companies pay tax since the 1920s.
Finance ministers will agree new OECD guidelines on base erosion and profit shifting, which focus on strategies used by companies to exploit gaps and mismatches in tax rules.