EC Outlines Progress On Consolidating Corporate Tax Base

by Ulrika Lomas, for LawAndTax-News.com, Brussels

07 April 2006

The European Commission on Wednesday presented a progress report and outlined the next steps towards creating a common consolidated corporate tax base.

According to the EC:

"Encouraging progress is being made by the Commission-led expert working group on the Common Consolidated Corporate Tax Base (CCCTB). The CCCTB will enable companies to follow the same rules for calculating the tax base for all their EU-wide activities, thereby removing many of the tax obstacles to companies operating across the Internal Market."

"It will increase companies' efficiency, improve their competitiveness and significantly reduce their compliance costs...and general administrative burdens. Member States will retain full sovereignty over their tax revenues as they will continue to set their own national tax rates. The European Commission plans to present its legislative proposal in 2008."

The Commission’s Communication on CCCTB reported encouraging progress to-date made by the working group. However, it drew attention to those areas where further political support is desirable from Member States.

The main conclusions of the Communication were that:

• The CCCTB should be simple and uniform with as few as possible exceptions;
• The tax base should be consolidated and optional for companies;
• The rules for calculating the CCCTB should be self-standing and not formally linked to the international accounting standards (IAS/IFRS); and that
• The current approach of working in close cooperation with Member States experts, business and academia is the most effective.

The CCCTB working group was created in September 2004. It is composed of experts from the European Commission and the Member States, but is extended on an ad-hoc basis to experts from business and academia. The working group meets quarterly.

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