Four years after failing to formulate common company tax rules across Europe, the EU is set to tackle the low-tax arrangements of states that have benefited the likes of Amazon, Starbucks and Apple.
The European Commission is due on Wednesday (17 June) to set out plans for a so-called common consolidated corporate tax base (CCCTB), after its previous attempt met member state opposition to what is still a matter of national sovereignty.
Yet corporate taxes have remained in the headlines because of the way multinationals can legally reduce their bills by basing themselves in low-tax centres. And the EU is already investigating the tax arrangements of Apple, Starbucks and Amazon in some member states.
It said in June last year those investigations are at an advanced stage, and decisions could be announced in coming months.
In a paper to be published on Wednesday, the Commission says its latest CCCTB proposal in 2011 was for an optional system, which limited its effectiveness as a tool for preventing profit shifting by cross-border companies.
“The Commission will therefore work on a proposal to make the CCCTB compulsory, at least for multinational enterprises,” it says in the document, which could still face last-minute changes ahead of publication.
The plans are designed to prevent “aggressive” tax planning, such as artificially shifting profits to a country where rates are lowest, or beneficial tax rulings can be secured.
Chas Roy-Chowdhury, head of taxation at accounting body ACCA, said the plan would likely end up in the form of enhanced cooperation.
“The main thing is to make sure that any CCCTB tax regime is fully compatible with global initiatives and that we need as many member states involved as possible,” Roy-Chowdhury said.
The Commission says it would advocate a step-by-step approach. “The primary focus should be on securing the common tax base,” the document said.
“The Commission will present a new legislative proposal as soon as possible … introducing the mandatory element and providing for a staged approach to the CCCTB.”
The proposal could also address the more favourable treatment currently given to corporate debt over shares.