By Bruno Waterfield - 4th April 2006
Proposals to allow a vanguard of EU countries to harmonise the way corporate tax is calculated may emerge next year, the European commission said on Wednesday.
European taxation commissioner László Kovács has outlined progress towards an EU common consolidated corporate tax base (CCTB) across the EU.
National and EU officials from all 25 members states are working on the technical methods by which to arrive calculate a CCCTB.
The measure is firmly opposed by capitals such as London and Dublin that regard the move as a slippery slope to EU tax harmonisation.
Kovács revealed that if progress continued with opposition in the minority, a fast-track group may proceed under the EU’s enhanced cooperation procedure.
The EU treaty allows smaller groups of European countries to move ahead in policy areas with the consent of a majority of governments.
“If there is no unanimity by 2008 then we will certainly put proposals in the framework of enhanced cooperation with the support of as many members states as possible,” he said.
“The target date of 2008 is quite flexible and liberal… if by the end of 2007 there is no unanimity we can start to elaborate enhanced cooperation."
“It needs only a qualified majority vote to accept enhance cooperation and I do hope that can be provided.”
All member states are involved in the technical groups working on the methodology behind a CCCTB.
“I can not complain that any member state is not giving support for technical work,” he said.
“The exchange of views is certainly useful and at the end of the day I am sure there will be more and more members states supporting.”
Progress to date will be discussed over lunch at an informal Vienna meeting of EU finance ministers on Friday.
The commission argues a CCCTB will cut tax obstacles for companies operating across the internal market and reduce compliance costs.
National capitals will retain full sovereignty over tax revenues as they will continue to set domestic rates allowing tax competition.
But opposition – publicly voiced – to the CCCTB has been heard from internal market commissioner Charlie McCreevy.
The Irish commissioner believes the CCTB is tax harmonisation by the “back door” as a CCCTB will be based on agreement of what constitutes taxable profits.
Kovács insists that debate between member states and within the Europan commission is only natural.
“There are some commissioners who have presented arguments against. It is the beginning, it would be surprising if all 25 commissioners were in favour. A broad majority of commissioners are in favour.”
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