Single Market Act To Harmonize EU Tax Base

by Ulrika Lomas, Tax-News.com, Brussels

29 October 2010

The European Commission has said proposals for a common European tax base for companies will be one of the dozens of measures it plans to implement over the next two years in order to strengthen the single market.

The Commission adopted the "Single Market Act" on October 27 as a plan to "boost growth and restore confidence" in the benefits of market integration in Europe. The Act sets out 50 proposals to be enforced by 2012.

"Businesses and citizens have reaped huge rewards as the EU steadily broke down internal barriers to goods, services and people," said Vice-President Viviane Reding, EU Commissioner for Justice, Fundamental Rights and Citizenship. "I want to build on our achievements so that everyone – from tourists and students to workers and small business owners – can truly benefit from a European area of freedom, security and justice."

Among the key priorities set out in the plan is increasing capital for SMEs, under which the Commission proposes that stock exchange listing rules will be simplified, to improve small firms' access to sources of funding. In addition, accounting rules will be simplified and the Commission will look at "introducing a common tax base for businesses operating cross-border."

European Taxation Commissioner Algirdas Šemeta has said that a formal proposal for the common consolidated corporate tax base, or CCCTB, will be issued by the European Commission next year. Brussels has denied that the CCCTB will be the first step towards the harmonization of EU tax rates, but low-tax EU countries such as Ireland remain unconvinced. A common tax base could actually increase costs for businesses operating in certain member states.

The EC will also propose legislation under the Single Market Act to simplify the paperwork and formalities for the registration of cars bought in another EU country, and will address cases in which citizens are required to pay registration tax twice.

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