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Today’s Top Headlines

EU CCCTB Could Harm Irish Tax Base

by Jason Gorringe,, London

16 December 2016

Ireland could lose up to 50 percent of its current corporation tax base if an EU-wide common consolidated corporate tax base (CCCTB) is introduced, according to economist Seamus Coffey.

Irish media reported that Coffey, who works at University College Cork and is a member of budget watchdog the Irish Fiscal Advisory Council, told parliament's Finance Committee that such a projection was "not unduly pessimistic."

He said: "There is no doubt that the system of taxing transnational companies has not kept pace with the modern economy and is in need of reform. However, it is hard to imagine any reform – even unilateral US tax reform – posing a greater threat to the huge gains from Ireland's most successful economic policy than the CCCTB."

Coffey explained that, in addition to EUR3bn (USD3.1bn) in corporation tax, US companies operating in Ireland pay EUR6bn in salary costs, undertake an average of EUR3bn of fixed capital investment, and buy approximately EUR3bn worth of goods and services from Irish suppliers.

The European Commission has proposed the introduction of harmonized rules on the calculation of a company's tax base in all EU member states. It also intends for tax revenues to be collected and distributed among member states under a formulary apportionment approach, whereby revenues would be allocated based on factors such as turnover, sales, and employment levels.

TAGS: tax | investment | European Commission | Ireland | budget | corporation tax | transfer pricing | tax reform | European Union (EU) | services | Europe

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