The support follows the Commission’s Communication on company
taxation of October 2001, which argued that such an EU-wide tax
base is the only systematic remedy to the various tax obstacles in
the Internal Market and the current costly inefficiencies resulting
from the operation of fifteen different sets of tax rules.
During the conference, more than 500 high-level tax specialists
from the public and private sectors in the EU, candidate countries
and beyond debated four options that the Commission had presented
to achieve this objective and their political and technical
implications.
Discussions will continue with Member States and all interested
parties and the Commission will at the same time work on the
technical aspects. The Commission will publish a progress report in
early 2003.
"Without determined action on the tax front, the EU will fail to
achieve its self-imposed objective of becoming, in this decade, the
most competitive and dynamic knowledge-based economy in the world",
said Taxation Commissioner Frits Bolkestein today. "The concept of
a common consolidated tax base for the EU-wide activities of
companies, which is the subject of today's conference, is
ultimately the only means of tackling the various tax obstacles in
the Internal Market 'in one stroke'."
Many participants, including the European Parliament, UNICE and
ETUC representatives, agreed with the Commission's view that, while
targeted legislative measures should be agreed at EU level to
resolve individual tax obstacles, in the long term only a common EU
tax base would provide greater efficiency, simplicity and
transparency in company tax systems.
The perceived options are as follows:
- Common Consolidated Tax Base - where a multinational group
would be able to opt to calculate the taxable profits for all its
EU operations according to a new common set of tax rules applicable
across the EU. This appears to be the most popular option.
- Home State Taxation approach - where a multinational group
would be able to opt to calculate the taxable profits for all its
EU operations according to the tax rules of the Member State where
its headquarters are based, i.e. its 'Home State.' This was a less
popular option, but found some interest among SMEs.
- European Corporate Income Tax - viewed as unfeasible at this
time.
- Compulsory harmonisation of existing tax bases - viewed as
unfeasible at this time.
A number of specific issues were identified for further
research. These included the potential for using the International
Accounting Standards (IAS), which will be binding for the
consolidated accounts of EU listed companies from 2005, as a
starting point for developing a common tax base.
Another issue that requires research is the possible competition
and discrimination problems that could arise from having an
optional common tax base running alongside traditional national tax
bases.
Above all, it would be necessary to develop an appropriate
mechanism to apportion a common EU tax base between Member States
which would, regardless of the technical approach chosen, continue
to apply their individual company tax rates.
