The Bulgarian presidency of the EU Council will separate elements of a proposal for a common corporate tax base (CCTB) in the hope of reaching an agreement before the end of its term.
The presidency will try to “see what elements are beyond doubts” in the proposal, Bulgarian Finance Minister Vladislav Goranov said at a January 23 press conference after a meeting of the Economic and Financial Affairs Council.
At a technical meeting of the council’s highlevel working party on tax issues on January 17, the Bulgarian presidency tested the waters on two issues: removing the tax deductions and the turnover threshold of €750 million from the proposal.
On the first issue, the presidency explained in a document seen by Tax Analysts that while tax rates are out of the scope of the CCTB, national economic policy decisions may “take various forms that would be directly affected by the CCTB and [common consolidated corporate tax base] proposals, including, notably, tax deductions, tax credits, tax exemptions, or tax base reductions/ allowances. At the same time, most delegations have indicated that they are not ready to give up their sovereignty in this field, which renders harmonization difficult,” the presidency paper says.
“A possible first step could therefore be to define an as-broad-as-possible [CCTB], which would mean to remove all deductions/ exemptions/allowances from the CCTB proposal,” the document says. It also says member states could consider removing the €750 million turnover threshold for the CCTB, ”which would simplify negotiations.” This could have the potential for establishing a common tax base with 27 member states, sources explained.
Then, in a second step, member states could explore a harmonization of tax incentives, the presidency paper says. Tax credits normally occur after consolidation, so they would not necessarily need to be harmonized in that step, the paper says. “Since unanimity is expected to be difficult to reach in this field, technical discussion could try to achieve consensus among as broad a group of delegations as possible, with a view to possible future enhanced cooperation among the member states concerned (also involving consolidation via the CCCTB proposal),” the document concludes.
One source explained that the strategy seems to be to design a common tax base (without deductions) with 27 members and then have a CCTB+ (enhanced cooperation) with a smaller group of member states, if no deal can be made with 27. Enhanced cooperation is a tool for situations in which agreement can’t be reached among all EU member states and when at least nine countries agree to move forward together. It has only been used once on a tax issue, for the financial transaction tax.
The presidency is expected to make a formal proposal to isolate all controversial issues regarding tax deductions for the next technical meeting of EU member states February 1.
After the ECOFIN meeting January 23, commission Vice President Valdis Dombrovskis expressed disappointment regarding the CCCTB in the recommendation for the euro area adopted by ECOFIN.
“One comment we’ve made in this discussion is on the fight against tax evasion and aggressive tax planning, where the question is how much we rely on international best practices,” Dombrovskis explained at a press conference.
“We would have liked to have [clearer] wording that the EU wants to be at the forefront [of the fight against tax dodging] and if needs be, move ahead with initiatives which probably go beyond the international consensus,” Dombrovskis said.
The commission’s recommendation says that member states should take measures to fight aggressive tax planning. “This includes continuing work toward the CCCTB,” the proposal says. Member states have rephrased it somewhat. The text adopted by the ministers says the fight against aggressive tax planning should include “continuing work on the CCCTB.”
No Transparency on Non-Blacklisted Countries
As expected, ECOFIN adopted without discussion the removal of eight countries from the EU list of noncooperative tax jurisdictions. Tax Commissioner Pierre Moscovici took advantage of the presentation of the presidency’s priorities to call on member states to publish all letters of commitment sent by the jurisdictions that were screened. “Transparency is necessary to allow citizens, [nongovernmental organizations], parliaments, and medias to judge” progress made in the light of those commitments, Moscovici said. NGOs made the same call. Aurore Chardonnet, Oxfam International’s EU policy adviser on inequality and tax, said the EU is “rushing to take countries off the blacklist without it being clear what they have actually committed to improve. This is further undermining the process.”
“I think that without the permission of respective jurisdictions that have taken those commitments, it would be unfair to reveal those letters because we have asked them without telling them these commitments would be revealed,” Goranov said. He said the council’s Code of Conduct group on tax issues would be required to ask those jurisdictions if they are willing to make those letters public, because the decision would be in their hands.
The matter will be discussed at a meeting of the Code of Conduct group on February 14. Another sensitive point is the response to U.S. authorities, which, according to sources, have written to the EU to complain that Guam and American Samoa were included on the EU blacklist of noncooperative tax jurisdictions. The U.S. authorities reportedly maintain that those jurisdictions should not be treated separately from the United States.
By Elodie LAMER
Cette information est extraite de notre service d'actualité taxnotes