A new study published by CEPS (the Centre for European Policy Studies) proposes a Corporate Tax Action Plan as a means of achieving corporate tax reform in the EU.
With its latest study ‘An EU Company without an EU tax’, CEPS (the Centre for European Policy Studies) is urging businesses to work to move the issue of corporate tax reform higher up the EU Council’s agenda. On the basis of the evidence available (here CEPs cites the Commission’s own study and the 1992 report of the Ruding Committee), the cost of complying with the diversity of tax rules in the EU is estimated at around 2% to 4% of the total corporate tax revenues raised. Assuming that these figures hold true for the EU as a whole, the cost of the current complexity would fall in the range of €4.3 bn to €8.6 bn per year; the low end figure roughly equating to the budget of the EU institutions, says CEPS.
The report warns that the lack of progress in the field of taxation risks undermining the EU’s achievement in adopting the European Company Statute (ECS) and lessing the value of the introduction of a single reporting standard (based on the International Accounting Standards). The stated objective of the ECS is to allow companies operating in more than one Member State the option of establishing themselves as a single European company. However, given that tax issues are left to Member States, these companies are likely to find themselves required to incorporate in each of the respective countries for tax reasons.
CEPS proposed solution is the adoption of a Corporate Tax Action Plan, analogous to the action plan adopted for financial services. The plan would set a timetable for corporate tax reform, categorising and prioritising the different policy steps. By 2010 – the target date set by EU leaders in Lisbon, for the Union, to become the “most competitive economy in the world” – a more coordinated regime should be in place.
Immediate and short term priorities include, e.g., the coordinated implementation of the European Company Statute and the adaptation of existing tax measures. The long term objective would be agreement on a common corporate tax base.