On Tuesday 18 May, the European Commission will unveil its long-awaited Communication on 21st Century corporate taxation (see EUROPE 12672/22), which was originally scheduled for publication in the autumn.
According to the draft text, as seen by EUROPE, the main announcement should be that the Commission intends to withdraw its proposal for a Common Consolidated Corporate Tax Base (CCCTB) - which was blocked in the EU Council - and to replace it with a brand new proposal called BEFIT (Business in Europe Framework for Income Taxation) in 2023.
BEFIT will be a set of rules on corporate taxation in the EU, the main features of which will be a common tax base and the allocation of profits between Member States on the basis of a formula, according to the document.
“It will ensure that businesses in the single market will operate without any undue tax barriers. At the same time, BEFIT will ensure that the existence of mismatches between corporate tax systems in the EU does not undermine the ability of Member States to raise revenue to fund national spending priorities”, reads a draft communication.
The proposal will build on previous work at EU level, as well as on recent developments in global discussions on international taxation, the document says.
The draft text also details how the Commission intends to translate an OECD agreement on international tax reform into EU law (see EUROPE 12694/11).
With regard to the fight against tax evasion, the Commission plans, according to the document, to present, at the end of 2021, a legislative proposal to better fight against shell companies, which is expected to contain a series of minimum rules to be respected. The European Commissioner for Taxation, Paolo Gentiloni, had already announced this to MEPs in March in response to the OpenLux scandal (see EUROPE 12676/7).
The Commission is also considering presenting a legislative proposal by 2022 for the publication of effective tax rates paid by large companies, based on the methodology under discussion in the framework of Pillar II of the tax reform negotiated at the OECD.
The Commission is also expected to present a new directive (Debt-Equity Reduction Allowance - DEBRA) in thefirst half of 2022 to address the imbalance between debt and equity financing instruments in the tax rules of several EU Member States, by encouraging companies to finance more investments through equity, rather than debt.
In addition, it intends to launch a reflection, which should lead to a tax symposium in 2022, on the “EU tax mix for 2050”.
Finally, on the same day, the Commission is also expected to adopt a Recommendation to Member States on how tax administrations should deal with corporate carry back losses due to Covid-19. (Original version in French by Marion Fontana)