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ACCA Lends Support To EC's Home State Taxation Proposals

by Caroline Maxwell,, London

23 December 2002

The UK's Association of Chartered Certified Accountants (ACCA) has urged the government to accept European Commission proposals which would allow the country's small businesses to expand their reach to other EU member states.

In a statement released last week, the accounting body observed that: 'At present, the single market is in practice open only to large businesses, as they have the necessary resources to operate within the fifteen different tax regimes of the European Union'.

However under the EC's Home State Taxation (HST) proposals, SMEs would be permitted to use their domestic tax systems to calculate their taxable profits, with the local authorities then dealing directly with the payment of tax to the other EU states entitled to tax a slice of the profits.

Arguing that the HST scheme is a favourable option because it can be implemented quickly by interested member states, without the need for unanimous Union-wide agreement, ACCA head of taxation, Chas Roy-Chowdhury announced that:

'Those states wishing to participate in the system would be greatly helping their small businesses to operate in what will be the world's largest market by 2004.'

The ACCA expects that there will be a pilot project in 2003 or 2004, involving a limited number of businesses and states, and predicted that if the pilot is successful, the HST system will be made available to all EU states. However, it urged the British government not to miss the boat as a result of tax harmonisation or economic control fears, warning that:

'Given the current economic climate, UK small businesses cannot afford to be left out of any concrete proposals which improve their business environments and help them to develop new markets and provide new employment opportunities.'

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