The European Commission has today presented an Action Plan to fundamentally reform corporate taxation in the EU.
The Action Plan sets out a series of initiatives to tackle tax avoidance, secure sustainable revenues and strengthen the Single Market for businesses.
Key actions include a strategy to re-launch the Common Consolidated Corporate Tax Base (CCCTB) and a framework to ensure effective taxation where profits are generated. The Commission is also launching a public consultation to on corporate tax transparency in the EU. The consultation is aiming to find out whether requiring companies to disclose more information about the taxes they pay could help tackle tax avoidance and aggressive tax practices in the EU.
The European Commission is today launching a public consultation
The fight against corporate tax avoidance is a top priority of this Commission. The consultation is part of the broader Action Plan for Fair and Efficient Corporate Taxation that is also being presented today. The Commission's work follows through on the commitments made by G20 leaders, who have pledged to ensure that tax authorities freely exchange information about large multinationals, including their country-by-country reporting (CBCR).
Some companies currently generate large profits in the Single Market, but pay little or no tax in the EU.Some multinationals are able to use aggressive tax planning, national mismatches and legal loopholes due to their presence in multiple jurisdictions. Their use of complex corporate structures often puts small and medium enterprises (SMEs) at a disadvantage. It may also distort competition, put smaller rivals at a disadvantage and pit EU and non-EU companies within the Single Market against each other.
Vice-President Valdis Dombrovskis, responsible for the Euro and Social Dialogue said:
"Today we have set out an ambitious yet realistic plan for fairer and more growth-friendly taxation in the EU. It rests on the core principle that all companies – big or small, local or global - must pay a fair share of tax where real economic activity is taking place and where their profits are actually made."
According to the Commission, the rules that govern corporate taxation in the EU today are out-of-step with the modern economy, with uncoordinated national measures being exploited by some companies to escape taxation in the EU. The Commission said this leads to significant revenue losses for Member States, a heavier tax burden for citizens and competitive distortions for businesses that pay their share.
Pierre Moscovici, Commissioner for Economic and Financial Affairs, Taxation and Customs, said:
"Corporate taxation in the EU needs radical reform. In the interests of growth, competitiveness and fairness, Member States need to pull together and everyone must pay their fair share. The Commission has today laid the foundation for a new approach to corporate taxation in the EU. Member States must now build on it."
The Commission is also publishing a first pan-EU list of third-country non-cooperative tax jurisdictions.
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