A new corporation tax battle is looming for the Government as the European Commission seeks to harmonise how tax is calculated across Europe.
The European Commission is to bring forward a new proposal on a Common Consolidated Corporate Tax Base (CCCTB) for Europe as early as June. It follows the announcement on Wednesday of new rules requiring EU countries to share information on the tax deals it offers individual companies as Brussels clamps down on tax avoidance by multinationals.
Higher bills
The CCCTB, which the Irish Govermnent strongly opposes, would allow companies operating within the EU to consolidate their profits in one EU state – which could lead to higher tax bills for large corporations, many of which have their tax base in Ireland.
The idea of a common tax base for Europe has been circulating for decades, but has failed to garner sufficient political support from EU member states. A 2011 commission proposalhas languished in the EU legislative system.
However, the recent “Luxembourg Leaks” controversy, which revealed how multinational companies exploited tax loopholes to lower their tax bills, has given the project renewed impetus with European Commission president Jean-Claude Juncker vowing to prioritise tax avoidance over his five-year term.
According to EU officials, the commission is likely to take only some elements of the existing CCCTB proposal as it seeks to revive the stalled legislation.
Meanwhile, Downing Street increased the pressure on multinationals who artificially shift profits out of the UK as British chancellor of the exchequer George Osborne unveiled a tax targeted at multinationals.
The legislation, which will be included in Osborne’s final Finance Bill before the May 7th election, will be published next week.
The commission’s unveiling of rules on tax rulings comes as Taoiseach Enda Kenny travels to Brussels on Thursday for a two-day EU summit. The meeting will also be attended by Greek prime minister Alexis Tsipras, amid continuing tensions between Athens and its international lenders.
