GUE/NGL
News

Commission proposals on CCCTB fall short of expectation

The European Commission has launched controversial new proposals on corporate tax which not only aim to harmonise the tax base across the EU but also to prevent multinationals from negotiating secretive tax arrangements.

Under the Common Consolidated Corporate Tax Base (CCCTB), there will be a single set of rules to calculate companies' taxable profits within the EU. 

The CCCTB will establish to link where a company’s product is physically sold with where profits generated from those sales are taxed.

In addition, companies will no longer be able to exploit loopholes in the system such as the discrepancies between different corporate tax regimes.

Reacting to the proposals, Fabio De Masi MEP, Vice-President of the Committee of Inquiry into Money Laundering, Tax Avoidance and Tax Evasion (PANA), said:

“Companies are one unit – no matter how many letterboxes they have. It is therefore sensible to evaluate their profits on an EU level and to divide them according to a company's economic activity.”

“However, with its proposal to create a CCCTB the Commission does not yet create tax justice. Rather, the proposal threatens to decrease the tax base even further and to intensify tax competition,” added the German MEP. 

“The rules governing which enterprises belong to the same company are defined too narrowly and, on top of that, tax havens outside of the EU are excluded from the Commission's proposal,” De Masi said.

Irish MEP Matt Carthy and PANA member also felt the proposals leave a lot to be desired:

“Tax avoidance is one of the great global injustices of our time and it flows from the limitations of the arms-length principle.”

“But in order for unitary taxation to work as an effective solution it needs to be global. Under this proposal, much of the current system will remain intact. It won’t solve the problem of international transfer pricing, or of profit-shifting to offshore centres,” said Carthy. 

“The race to the bottom of corporate tax rates in the EU may intensify if the only tax tool remaining to state governments to adjust is the headline corporate tax rate. Loss offsetting across borders will actually reduce the overall corporate taxation base in the EU.”

“We will support EU and international efforts to combat tax avoidance but they need to be well-designed, effective and carried out in a way that keeps important economic decision-making powers in the hands of local elected governments,” he concluded.

Carthy’s views were echoed by Marisa Matias, coordinator on the Committee on Economic and Monetary Affairs (ECON). The Portuguese MEP commented:

“The Commission is making this huge propaganda operation telling people that CCCTB is good for Europe.” 

“But what they don't tell us is that by Europe they only mean European corporations – not the citizens.” 

“What we need is a CCCTB that puts citizens’ interests above corporate ones,” argued Matias.