Brussels, 01/12/2015 (Agence Europe) - On Tuesday 1 December, the committee on economic and monetary affairs of the EP (ECON) approved, by 45 votes in favour, three against and 10 abstentions, a series of corporate taxation recommendations contained in the report by British member Anneliese Dodds (S&D) and Ludek Niedermayer of the Czech Republic (EPP), built on the work of the special TAXE committee. Although the report by the two MEPs has been talked about much less than the report of this special committee, it will have a considerable legislative scope. The Commission must respond to these recommendations within three months (if approved in plenary on 16 December), adopting a legislative proposal or explaining why it has not.
The ECON committee calls on the Commission to present a proposal on 'country-by-country reporting', based primarily on the model of the OECD (declarations to the administrations, then exchange of information between administrations), but taking account of the EP's position in the framework of the revision of the directive on shareholders' rights (public reporting) and the results of the impact assessment currently being carried out by the Commission on this issue.
The Dodds/Niedermayer report also calls upon the Commission to present a proposal as soon as possible for a 'fair tax payer' label, with a European framework for the eligibility criteria, but with the national institutions solely responsible for issuing the label. The MEPs are also calling for the introduction of a mechanism whereby the states will be obliged to notify each other of their intention to bring in new exemptions, tax incentives or similar measures which could have an impact on their effective taxation rate or on the base of another state. The Commission is also called upon to create harmonised methodology to allow the member states to calculate the scale of direct and indirect corporate taxation lost. The MEPs also want improved protection for whistleblowers who act solely in the general interest by disclosing not just illegal activities, but also wrongdoings and misconduct.
As regards the common consolidated corporate tax base (CCCTB), the MEPs accept the two-stage approach decided upon by the Commission. They want a proposed obligatory common base for June 2016, if possible with a temporary exemption for SMEs which are not multinationals and for businesses which have no cross-border activities. By the end of 2017, the MEPs want the 'consolidation' aspect of the proposal to be tabled. However, they do not want a temporary cross-border loss offset regime, unless the Commission is able to guarantee the transparency of this and that it will not open up any new opportunities for aggressive tax planning. The proposal for a consolidated tax base (CCCTB) or a non-consolidated tax base (CCTB) must also include an anti-abuse rule, the report states.
The MEPs are also calling for a reform of the 'corporate taxation code of conduct' group and orientations from the Commission on preferential tax regimes, a definition of permanent establishment, new guidelines by mid-2017 on state aid related to corporate taxation and a proposal for a harmonised framework on the rules on controlled foreign corporations.
Additionally, the report calls for sanctions (removal of access to state aid, for instance) for companies which make use of tax havens, which themselves should be defined at EU level.
Lastly, the ECON is calling for the introduction of a withholding tax or similar measure to stop profit from leaving the EU untaxed.
“The governments and the Council can no longer bury their heads in the sand: the time to take action against tax fiddling is now”, said Dodds after the vote. At the time of going to press, Niedermayer had not responded to our request for comments.
Commission already has plans for tax.
However, the Commission already has a few projects underway. In theory, a package on corporate taxation is expected to feature on the agenda of the meeting of the College of Commissioners of 27 January 2016. This is expected to comprise an anti-BEPS directive, named after the OECD's action plan to fight base erosion and profit shifting, which will be translated into European legislation. A number of 'BEPS' points of the initial proposal for a common consolidated corporate tax base (CCCTB) will be included in this anti-BEPS directive.
As the application of 'BEPS' will require the revision of the bilateral tax agreements of the member states, the Commission will also publish recommendations to this effect.
On 8 March, the question of 'country-by-country reporting' will be on the Commissioners' agenda. By this stage, the Commission should already have an initial draft of its impact study to determine whether this reporting should be published or whether it should go along with the OECD's recommendation, and limit it to an exchange of information between tax administrations. On the same day, a VAT action plan will be discussed by the Commissioners. Lastly, a proposal for a common corporate tax base ('CCTB') will be presented by the end of the year. The Commission wishes to move forward in stages and will tackle the consolidation aspect at a later date. (Original version in French by Elodie Lamer)