Eight countries object to common corporate tax plan

Concerns focus on the impact on competitiveness and on the costs to business

The EU concept of a single corporate-tax system has run into objections from eight countries, condemning it to months of further negotiations. By the deadline of 19 May for comments, Ireland – for long the most vocal critic – was joined by Bulgaria, the Netherlands, Malta, Poland, Romania, Sweden and the UK. The concerns focus on the impact on competitiveness and on the costs to business.

Under the European Commission’s plan for the common consolidated corporate tax base, or CCCTB, companies in the EU would be able to opt for a single EU-wide method for calculating their tax. The objections do not necessarily mean that the plan will be withdrawn, but the level of opposition could lead to the Commission making amendments.

Enhanced co-operation

The current proposal needs backing from all member states – and the European Parliament – if the system is to be introduced. Since unanimous member-state support looks increasingly unlikely, Commission officials have already indicated that enhanced co-operation could be used to allow some countries to go ahead with the scheme, while allowing others to stay out.

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CCCTB does not lower the rate of tax directly (this, the Commission insists, should remain an issue of national sovereignty), but rather harmonises the tax base – the way taxable profits are calculated. Companies that operate in more that one EU member state would be able to have their tax calculated centrally, then distributed to each country in proportion to the amount of business they do there.

The Commission argues in favour of harmonising the 27 current systems, which, it says, make the corporation- tax process too complex and costly for businesses that operate in more than one member state.