Brussels, 22/05/2007 (Agence Europe) - “Let me be clear on one thing, despite what some of the CCCTB's critics continue to falsely accuse the Commission of, it's not my intention to take any action on tax rates. … the initiative the Commission will take in 2008 aims at harmonising the corporate tax base while member states will keep full sovereignty in determining their corporate taxation rate,” said European Taxation Commissioner László Kovács at a conference on the Common Consolidated Corporate Tax Base (CCCTB), organised last week by the German presidency.
He was at pains to show that tax rates were not necessarily the major factor in the decision of a company to set up in a country: “The analysis of empirical data reveals that the divergence in taxation rates has had a limited role in influencing the localisation of investment in the EU. The polarisation of the debate on this topic seems to be disproportionate with respect to the reality”. According to recent surveys of companies, taxation level is considered “as being only the seventh most important factor influencing the choice of firms, well below the other elements such as access to markets, investment climate, labour costs, presence of an educated labour force, quality of infrastructure and public services,” he said. He also quoted an OECD study which said that differences in taxation rates could explain no more than 3% of differences in investment flows.
For Mr Kovács, the primary aim of a CCCTB “is to create a simpler and more transparent corporate tax environment in the EU”. The result would be fairer tax competition. A CCCTB “would enable companies operating in the single market to follow the same rules for calculating their tax bases in the different member states” and would avoid “many of the current difficulties associated with trading across borders such as double taxation, transfer pricing and the lack of cross border loss relief, and of course reduce those 'dead-weight' compliance costs”. (mb)