Brussels, 21/03/2012 (Agence Europe) - By a large majority (31 to 7 with 1 abstention), the European Parliament's economic and monetary affairs committee voted on Wednesday 21 March on a report by Marianne Thyssen (EPP, Belgium) in favour of the European Commission's suggestion that a common consolidated company tax base should be introduced in Europe (see EUROPE 10338). Unlike the European Commission, which is suggesting an optional system, the MEPs want a roadmap to lead to a compulsory system for all large companies (small and medium-sized companied would be exempt) after a five-year transition period. The EP is only being consulted on the new legislation. It will express its views in plenary next month or early in May.
In her report, Thyssen explains the advantages of the consolidated tax base. It would reduce red tape for companies by introducing a single tax return for all their business throughout the EU, to be processed by a single tax office (a one-stop shop system); cut costs and avoid double and over-taxation by providing the option of consolidating profit and loss of all subsidiaries in the EU; make it easier to set up subsidiaries in new member states and make it easier for small businesses to do business overseas (small businesses are often put off by high costs and/or tax complications arising from the EU's 27 different tax systems); make the European market more attractive to foreign direct investment (fdi) by providing a single tax system; encourage R&D; and make company tax more transparent, discouraging tax evasion and shopping around for the best tax system. The idea is, at the moment at least, to harmonise only what tax is levied upon, rather than the rate of tax itself, but this may change when the system is up and running.
The report highlights the advantages, which the big political parties are also keen to stress. Many areas are still under debate, however, and more than a hundred amendments have been tabled on issues like introducing the new rules in some member states through the enhanced cooperation mechanism if unanimous agreement is not possible, and whether the system should be optional - with companies deciding for themselves whether to apply it.
The MEPs want it to be possible for the new system to be introduced by several eurozone nations by means of enhanced cooperation. Nearly all the MEPs in the committee want the system to be compulsory for all companies apart from small and medium-sized enterprises after a five-year transition period, starting from the date of the directive's adoption. In a press release, Sylvie Goulard (ALDE, France) says a roadmap should be introduced stipulating that at least two years after the directive is introduced, all companies with the special EU status and all European cooperatives should be obliged to join the system and the Commission should provide a setup whereby small businesses active in more than one member state should be allowed to join. After five years, she says, the directive should apply to all large companies and after five years of operation, the Commission should assess the way the directive is working and submit a report to the EU Council of Ministers and European Parliament along, if needed, with draft legislation to update the directive before 2020.
Liem Hoang Ngoc (S&D, France) said the vote was a success for the Left, saying that it had been possible to convince the conservative rapporteur to call for a compulsory harmonised tax base for all European companies apart from small businesses, which will have the option of whether to use it or not. The MEP said it was an important step to tackle tax dumping and more in the direction of full tax harmonisation as the draft report states that the question of compulsory minimum tax rates should be examined five years after the directive comes into force. Pascal Canfin (Greens, France) echoed this, saying that the system should be accompanied by a harmonised minimum rate of company tax to help eliminate tax dumping which at the moment allows companies to avoid up to €100 billion in tax. (FG/transl.fl)