Brussels, 18/04/2002 (Agence Europe) - In the context of a study by Karel Lannoo and Mattias Levin, published in Brussels on Wednesday, the Centre for European Policy Studies suggests that the Commission launch a "Corporate Tax Action Plan" for 2010, modelled on the action plan for financial services..
Pursuing the reflection launched by the Commission in its Communication of last October on corporate tax (see EUROPE of 24 October, p.8), CEPS wonders about the relevance of a "European company without European tax?". Without progress in corporate tax, the European Company Statute, adopted in 2001, and the agreements on international accounting standards, which the Council should soon be confirming, "will not change much for cross-border companies", says Karel Lannoo. According to the data of the "Ruding Committee" on taxation, taken up in the CEPS report, the necessary cost for companies to adapt to the different tax systems of the Member States would represent in the order of 2 to 4% of their tax on revenue, he recalled The length and difficulty of the arbitration procedures between tax administrations amounts to totally unproductive costs for companies, stresses the director of tax policy at Shell International, Theo Keijzer.
"We are not pleading in favour of harmonisation of the level of tax", but for a choice between two possible solutions: the principle of taxation in the State of the company's residence or the creation of a common tax basis, said Karel Lannoo. The two options, which the Commission presented in its Communication, will be at the centre of the debates of the conference on corporate tax, which the European Commission is organising in Brussels on 29 and 30 April, the Director General for tax in the Commission, Michel vanden Abeele, recalled on the occasion of the launch of the CEPS study. The main problem raised by the creation of a common tax base is that of the distribution of revenue between Member States, stressed Michel vanden Abeele. "It's an extremely sensitive issue for Member States", he repeated, while acknowledging that discussions on VAT had demonstrated that the key-distribution of revenue was not necessarily "the most difficult question".
According to Karel Lannoo, a common tax base "should be as broad as possible and not be limited to revenue collected in Europe, but also relate to revenue on interests from the United States, for example". Whatever, "there needs to be a simple system that does not serve to make the fortune of tax advisors", Michel vanden Abbele noted wryly.
So as to move the debate forward, the CEPS report proposes a four-stage action plan: 1) as from now: a prolongation of the code of conduct on harmful tax practices beyond 2002, the ratification of the prolongation of the Arbitration Convention, the adoption of a directive on interests and royalties, blocked by the Council since 1997; 2) by 2003: adaptation of the directive on mergers and subsidiary companies, the extension of the field of application of the merger directive to improve the rules on the transfer of assets and compensation for losses, harmonisation of bilateral tax treaties and their alignment on the international model; 3) by 2010: introduction of an optional common tax base for companies, recognition of the principle of taxation in the country of origin; 4) in the long-term: the creation of a common tax base.
The Commission could take this "excellent idea" on board, said Michel vanden Abeele