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Europe launches public consultation on CCCTB

The European Commission has launched a public consultation to gather views on its proposal for a common consolidated corporate tax base (CCCTB).  09 Oct 2015

The Commission plans to propose revised legislation next year, as part of its action plan for 'fair and efficient corporate taxation', it said in a statement.

Under a CCCTB, businesses would have to comply with just one EU system for computing their taxable income, rather than the current situation where they have to comply with different rules in each EU country in which they operate, the Commission said.

The consultation aims to gather views on how well a CCCTB could work as a tool against aggressive tax planning, while ensuring the EU remains "business friendly", the Commission said.

The Commission also asked for feedback on a proposed 'two-step approach' to the CCCTB regime, and on the criteria that will determine which companies would be covered by a mandatory CCCTB.

Negotiations on the CCCTB stalled because of the scale of the original proposal, the Commission said. It has therefore put forward a two-step approach that would see a common tax base developed without consolidation. Consolidation means that EU countries are allowed to tax their share of the base at their own corporate tax base so that companies could offset losses in one member state against profits in another. That will be introduced once the common tax base has been agreed, the Commission said.

The proposals also include a mandatory CCCTB for multinational companies. The Commission has asked for feedback on the criteria for determining which companies should be included in this, and whether other companies should be allowed to opt-in.

The Commission first proposed the introduction of a CCCTB in 2011, although the idea dates back to the Ruding report produced for the Commission by the Institute of Fiscal Studies in 1992. If adopted in its entirety, the CCCTB would create a single set of rules that cross-border companies could use to calculate their taxable profits in the EU instead of having to deal with different national tax systems.

When the CCCTB was first proposed it was an optional system, with the primary focus on simplifying the tax environment for businesses in the single market.  Since then, however, the potential to use CCCTB as an anti-avoidance tool, has been promoted by the Commission.

Earlier this year David Gauke, financial secretary to the UK treasury told European Parliament representatives that the UK will not adopt the proposed measures because of the mandatory nature of the planned CCCTB for multinational companies, according to The Guardian.

Business lobby group BusinessEurope said in June that it had withdrawn its previous support for the proposed CCCTB for the same reason, while the Institute of Directors described it as "unhelpful political populism".