The newly published Action Plan on Fairer Corporate Tax System in the European Union identifies five key areas of tax policy work for the immediate, medium and long-term future, with the re-launch of the common consolidated corporate tax base (CCCTB) central to its plans. ACCA has been a long standing supporter of the CCCTB proposal, since its inception.

ACCA also takes notes of the launch of the consultation on corporate tax transparency, and looks forward to contributing to the debate.

Chas Roy-Chowdhury, head of taxation at ACCA says: “We share the European Commission’s view that we need a fairer corporate tax system, better adapted to the needs of our global, mobile and digitalised world. Multinational companies (MNCs) must indeed pay taxes in the countries where they generate profits, and they should not be able to shift profits artificially to countries with low - or even zero - tax rates.

“However, while being in favour of the concept, we believe that the CCCTB may be difficult to implement as a mandatory system. Member states may not find it palatable to relinquish the complete design and implementation of their Corporation Tax system, and would probably wish that companies were able to choose. Most companies would probably be subject to the domestic system anyway, as they are not MNCs, and MNCs might actually consider that the domestic system was more attractive but would not be in a position to  use it anymore, putting inward investment at risk. ”

While agreeing that a new approach is needed to ensure growth-friendly, fair and transparent corporate taxation, ACCA warns that a realistic approach is needed about what tax reforms are able to achieve. ACCA also notes that describing the CCCTB as a “holistic solution” to profit shifting seems optimistic.

“Current public concerns have their roots in the apparent disconnect between local corporate performance and local / corporate taxation. CCCTB will probably not be able to eliminate that disconnect, it will merely redefine it. If these measures are to really make things better, rather than just different, then policymakers need to consider the practicalities of global trade, as well as their related tax and accounting considerations,” Chas Roy-Chowdhury explains.

“As a global accountancy body, we strongly believe that to be credible, the comprehensive approach to corporate taxation proposed by the Commission must take into account the latest international developments on the matter. We recommend that work on CCCTB should only commence in earnest after the BEPS project outcomes have been finalised, in order to make sure that the CCCTB and other EU measures are fully aligned with the OECD conclusions. We cannot take the risk of ending- up with two different sets of rules”, Chas Roy-Chowdhury adds.

On the point on dispute resolution, included in BEPS action point 14, ACCA recommends having  timely - ie within the 24 months proposed under BEPS or less - mandatory binding arbitration.  Chas Roy-Chowdhury stresses: “The EU rules must also stop member states from blocking recourse to arbitration as it currently happens widely across the EU.”

Chas Roy Chowdhury concludes: “Tax is only a part of the equation when businesses are calculating where and how to grow and invest. There is plenty for the EU to work on while the OECD finalises BEPS, and initiatives such as the Capital Markets Union will be as important to long term growth as CCCTB and the rest of the tax agenda.

“ACCA is also very supportive of the tools aiming to ensure cooperation, coordination and information exchange between Member States, and also with various stakeholders. In that vein, ACCA is an active member of the Platform on Tax Good Governance, and warmly welcomes the proposal to extend its mandate. This forum, made of tax experts coming from diverse backgrounds  and representing sometimes opposite fringes of the civil society, is very much needed to bring the necessary balance and credibility into the tax debate.”