EU Common Corporate Tax Base proposal won’t solve tax avoidance

Alan Walsh

Reporter:

Alan Walsh

EU Common Corporate Tax Base proposal won’t solve tax avoidance

Sinn Féin President Gerry Adams and MEP Matt Carthy.

Sinn Féin MEP Matt Carthy has commented on the European Commission’s proposals for a common corporate tax base (CCTB) and a common consolidated corporate tax base (CCCTB).

Speaking from Strasbourg, Carthy said: “The context of the renewed push for this proposal is widespread concern about tax avoidance internationally by multinational corporations.

“There are genuine and well-founded concerns among the public across Europe about tax avoidance, which the Irish government has contributed to, for example by the sweetheart deal granted to Apple.

“But we have serious concerns about the impact of this proposal on our right to set our own tax policies. While the ability to set our own tax rate will not be affected by this proposal, the common rules on calculation of deductions and exemptions will infringe on the rights of member states of the EU to set policies designed to best benefit their own people and economies.

“There are legitimate reasons to maintain our right to diverge from common EU rules on tax deductions and exemptions – without, of course, facilitating tax avoidance.”

Carthy, a member of the European Parliament’s Economic & Monetary Affairs committee continued: “At the same time, there are a number of problems with the way this proposal has been designed that mean it will likely not even achieve its stated aim of reducing tax avoidance.

“The race to the bottom of corporate tax rates in the EU may intensify if the only tax tool remaining to state governments to adjust as an incentive is the headline corporate tax rate. Loss offsetting across borders will actually reduce the overall corporate taxation base in the EU.

“We acknowledge that there are major limitations in the current system based on the arms-length principle but in order for unitary taxation to work as an alternative it needs to be truly global.

“As the proposals are limited to the operations of EU taxpayers in the EU, much of the current system will remain intact. The proposal won’t solve the problem of international transfer pricing, or of profit-shifting to offshore centres.

“We will support Irish, EU and international efforts to combat tax avoidance but they need to be well-designed, effective and carried out in a way that keeps important economic decision-making powers in the hands of local elected governments.

“The Irish Government’s actions in relation to the Apple case – by denying the state has played a negative role in global tax avoidance, and supporting Apple’s appeal against the ruling – has only weakened our position in relation to negotiating on this issue.”