Brussels, 14/03/2011 (Agence Europe) - On Wednesday 16 March, Commissioner for Taxation Algirdas Šemeta will present the Commission proposal on introducing a common corporate tax band for companies in the EU. This project is supported by the majority of member states but it is strongly rejected by some of them, including Ireland, which sees this as a way of introducing tax harmonisation rates.
This common consolidated corporate tax base (CCCTB), as already described by the commissioner, does not involve imposing tax rates. It involves a single raft of rules for determining the corporate tax band applicable, which should allow companies to operate within a single system, rather than 27 different tax regimes. The CCCTB would therefore reduce tax barriers (such as double taxation) to which companies in the single market are subject. It would reduce administrative and other related costs and help companies grow (details in EUROPE 10311). This project has been in the making for the last 10 years and is one of the most important initiatives in the Single Market Act (EUROPE 10243) presented last October.
Nonetheless, the initiative assumes a new dimension in the context of the conflict that erupted on Friday evening at the Eurogroup summit - between France and Germany on one side and Ireland on the other, on the subject of tax rates on corporate profits, which are considered as being too low in Ireland (12.5%) compared to the European average (25.7% in the euro zone, 34.4% in France and 29.8% in Germany) and subsequently, unfair. At the summit, the new Irish prime minister, Enda Kenny, rejected demands from partners for increasing Irish rates and a common corporate tax band, in exchange for improved lending conditions for this country as part of its recovery plan (EUROPE 10335).
Its partners would like Ireland to accept this demand before the next European Council on 24 and 25 March. No one has any doubts, however, that this subject will be the focus of all finance ministers' attention on 15 March in Brussels. If, however, Ireland and other countries continue to oppose the project (in a domain where unanimity is necessary), the Commission might suggest “enhanced cooperation” as planned for the European patent. According to the Commission's services, the envisaged project would be “voluntary” for companies, which could either choose the national or the European tax regime. SMEs are particularly opposed to it and their representative, the UEAPME, is afraid that an additional system could be added on top of the 27 systems that already exist. (F.G./transl.fl)