EU Action Plan on Corporate Taxation

5 Key Areas for Action

Dieter Kischel European Commission

DG TAXUD D1

• Action Plan for A Fair and Efficient Corporate Taxation in the EU - 5 Key Areas for Action

• Communication of 17.6.2015 [COM(2015)302] • Staff Working Document 'Corporate Income

Taxation in the European Union', SWD (2015/121)

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PROBLEMS

• Tax systems conceived in 1930s, for clear business models and tangible products

• Harmful tax competition (increasingly less transparent)

• Aggressive tax planning

• Need for more coherent and competitive approach to business taxation (Single Market, BEPS, etc.)

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OBJECTIVES

• Re-establishing the link between taxation and where the economic activity takes place

• Ensuring that Member States can correctly value corporate activity in their jurisdiction

• Creating a competitive and growth-friendly corporate tax environment for the EU

• Protecting the Single Market, including o measures to implement OECD BEPS, o to deal with non-cooperative tax jurisdictionso to increase tax transparency

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Action Plan for fair and efficient Action Plan for fair and efficient Corporate TaxationCorporate Taxation

Key Areas

1.CCCTB – a holistic solution to profit shifting

2.Ensuring effective taxation where profits are generated

3.Better tax environment for business (dispute resolution)

4.Progress on tax transparency

5.EU tools for coordination

ACTION 1: CCCTB AS HOLISTIC SOLUTION TO PROFIT SHIFTING

• Proposed in 2011: o Reduces administrative burden and compliance costs, o Consolidation offers cross-border losses relief, tackles

profit-shifting (notably by transfer pricing) within a group o Unified set of anti-abuse provisions, transparency

• New: staged approach: 1. Continue work on : international / BEPS aspects 2. 2016: 2 new proposals:

i. Mandatory CCTB / CCCTBii. Consolidation; to be discussed later

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ACTION 2: ENSURING EFFECTIVE TAXATION WHERE PROFITS ARE GENERATED• Some MNEs exploit mismatches to shift profits,

with no link on where the value is created• Leading to low effective taxation

1.Bring taxation closer to where profits are generated and ensure effective taxation of profits

• Criteria of Code of Conduct to give priority to ensuring effective taxation• Revision of I&R Directive and PS Directive

2.Improve TP framework in the EU 3.Linking preferential regimes to value creation

(patent boxes)

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ACTION 3: BUSINESS ENVIRONMENT

• Remove competitive distortions, improve Single Market

1.Cross-border loss offset• Until full CCCTB• Mechanism to recapture the losses once the group entity is profit-making

2.Improving double-taxation dispute resolution mechanisms

• Procedures are long, costly and not always resulting in an agreement• Arbitration convention is limited to TP disputes • Improving the system: clearer rules, more stringent timelines, examine

extention of scope and whether EU instrument would be more efficient

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ACTION 4: PROGRESS ON TRANSPARENCY• Adopt March proposal on exchange of information

on tax rulings quickly; implementation: 1.1.20161.More common approach to third country non-

cooperative jurisdictions• 2012 Action Plan: encourage third countries to apply minimum standards

of good governance – followed by Platform of Tax Good Governance• Publication of list of top 30 non-cooperative third country tax jurisdictions,

compiled from national blacklists (10 occurrences), followed by screening (Code of Conduct): 24 months

• Coordination of possible counter-measures

2.Corporate tax transparency• Public consultation on Country-by-country reporting: IA in 2016

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ACTION 5: EU TOOLS FOR COORDINATION

• Cooperation between MS is essential1.DAC: cooperation between tax administrations

and exchange of best practices. EC will promote a more strategic approach to

controlling and auditing cross-border companies

2.Reform of Code of Conduct and Platform on Tax Good Governance

• CoC: see how to extend mandate and change working methods• PTGG: prolong mandate, expand scope and enhance working methods

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More info provided under the following link:

http://ec.europa.eu/taxation_customs/taxation/company_tax

Thank you!

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