New EU tax plan backed by Liberal and Democrat MEPs

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MEPs adopted yesterday two reports setting out a new plan for a harmonised corporate tax system in the European Union, which would ensure that firms are taxed where they earn their profits. Under the current system, a company operating in several European Member States must file a tax return in each of these Member States. This is because the tax base is calculated differently in each Member State.

The planned “Common Consolidated Corporate Tax Base” (CCCTB), part of a wide-ranging proposal to create a single, clear and fair EU corporate tax regime, was approved by MEPs today. A separate, complementary measure which creates the basis for the harmonised corporate tax system — the Common Corporate Tax Base, was also approved. The proposals include measures to produce a clearer picture of where a firm generates its profits, and where it should be taxed.

Lieve Wierinck MEP, shadow rapporteur for the report on the Common Consolidated Corporate Tax Base (CCCTB) said:

“Together, we have today decided to send a strong signal to the Council that the future of corporate taxation in the EU lies in a common consolidated corporate tax base. It will lead to renewed competition, based on a harmonised and transparent basis.”

“A harmonised corporate tax system in Europe will be to the benefit of the competitiveness of our Member States, our companies and the EU internal market as a whole, securing a fairer and more favorable tax environment, while reducing compliance costs and administrative burdens. Having one internal market with 27 different tax systems is a recipe for tax avoidance. This cannot be efficient and conducive to the business climate in Europe.”

“Liberal and Democrat MEPs pushed to ensure that special attention should be paid to SMEs in this draft legislation, because we remain concerned that SMEs are paying more taxes than large multi-national companies, which cannot be just or fair. Any new system should remain optional for SMEs while including incentives for those who want to opt-in.”

Petr Ježek MEP, shadow for the report on the Common Corporate Tax Base (CCTB) commented after the vote;

“A Common Consolidated Corporate Tax Base is one important remaining missing piece to fight against tax avoidance. It will further strengthen our internal market & counter aggressive tax planning & tax evasion.”. “The reports adopted yesterday are based on a simple & fair criteria. Taxation should take place where the value is created; too often this principle is not respected.

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