Brussels, 26/10/2005 (Agence Europe) - On Wednesday 26 October, European Taxation and Customs Union Commissioner Laszlo Kovacs published a communication listing action currently being taken (or to be taken in the future) by his department at the Commission to help the EU achieve its Lisbon objectives. In order to meet the challenge of the Lisbon Strategy, 'it will be necessary to make Europe a more attractive place in which to invest and work; to promote knowledge and innovation; and to shape policies that allow European businesses to create more and better jobs. Taxation and customs policies have a significant role to play in the attainment of these objectives,' explains the Communication. The most striking initiatives are new legislation to establish a 'Common Coordinated Corporate Tax Base for EU Businesses (2008)' and guidelines on R&D tax incentives (2006). The Commission will be unveiling measures to reduce the tax obstacles faced by cross-border business and a strategy to combat counterfeiting. It will continue to modernise and simplify VAT rules.
The Commission will unveil a 'Common Coordinated Corporate Tax Base for EU Businesses' (CCCTB) in 2008 because 'the present co-existence of 25 different and even mutually incompatible corporation tax systems in the EU de facto imposes supplementary compliance costs and offers few opportunities for cross-border loss compensation… a CCCTB would permit cross-border offsetting of losses and solve the current tax problems linked to cross-border activities and restructuring of groups of companies'. The Commission 'does not intend to propose a harmonised corporate income tax rate'. The idea has been discussed at the EP (see EUROPE 9045).
'Tax incentives can help to address market failures and increase business research investment by reducing the cost of R&D,' notes the Commission. 'In recent years, Member States have introduced a variety of different R&D fiscal incentives or have reinforced existing ones. Over the last two years, an exchange of information among Member States on best practices in this domain has been overseen by CREST' (a scientific and technical research committee), but more coordination at EU level is required. The Commission will be publishing a communication' providing guidance on R&D tax incentives …to… help Member States jointly develop solutions to common problems and even devise mutually reinforcing R&D incentives… In line with the announcement made in its State Aid Action Plan, in 2006 the Commission will review its framework for state aid for R&D and innovation.' The Communication will 'in no way oblige Member States' to use the guidelines, but will 'where appropriate, set out the political message and main contents of possible future initiatives directed to Member States.'
The Commission wants to tackle tax obstacles restricting company cross-border business. On transfer pricing, it will be unveiling a new code of conduct for linked companies in the EU at the end of 2005. At the end of 2004, the Council adopted its first code of conduct to scrap double taxation in cross-border transfer price cases (see EUROPE 8844). Before 2007, the European Commission will unveil a rehash of Directive 69/335/EEC on indirect taxation on capital duty to phase out capital duty. Following the recent Marks and Spencer case at the Court of Justice (case C 446/03), it will be publishing a report in 2006 on cross-border loss relief (see EUROPE 8923 and 8964). 'The Commission is … currently evaluating the need for a new anti-fraud tax policy at European level.'
The Commission will be modernising VAT rules. The Commission has proposed a recast of the 6th VAT Directive 'to provide clear EU-level rules for traders wishing to business in the EU,' and hopes it will be adopted before the end of the year. The Commission will 'make a proposal by the end of 2005 for an EU mechanism to resolve or at least alleviate … double taxation' and before 2007, it will be unveiling a draft amendment to the VAT directive to review the relevance of VAT exemptions for various services of general interest (see EUROPE 9024).
'Customs policy has an important role to play in boosting trade,' comments the Commission, which will be publishing a draft modernised Customs Code later this year, which will be 'the legislative pillar of eCustoms.' Simplified customs legislation, streamlined customs processes and procedures will help achieve 'a simple and paperless environment for customs and trade,' explains the Commission.
The Commission says 'indirect taxation… can play a significant role in the sustainable use of resources in the European Union,' and before the end of the year, it will be unveiling proposed amendments to the Energy Products Taxation Directive (2003/96/EC), which 'has given Member States new scope for using taxes in order to facilitate the sustainable use of resources… the Directive requires amendment, however, in order to tackle the distortion of competition on haulage markets created by wide divergences in the levels of taxation of commercial diesel in all EU Member States.' The Commission is considering whether to propose changes to the Energy Tax Directive to introduce more ambitious environmental targets for energy taxation, adding that the 'newly adopted car tax proposal … includes provisions for the introduction of a CO2-sensitive element into the tax base of Member States' car tax provisions' (see EUROPE 8973 and 8984). Along with the phasing out of registration charges, the draft car tax legislation aims to cut car CO2 emissions.