EU-wide common corporate tax base still to be drafted

FINANCIAL services is now more likely to be included in plans for an EU-wide common base for calculating corporation tax, given the current economic crisis, according to European Commission sources.

Taxation Commissioner Laszlo Kovacs said he intends to finalise the CCCTB (common consolidated corporate tax base) draft before he leaves office later this year, but acknowledges that this will be too late for the current European Parliament to consider it. The draft was delayed late last year and a new impact study is being carried out specifically to determine whether financial services should be included in the proposal.

“Given the current climate, it is more likely that it will be included from the beginning,” said a Commission official.

Under the first proposal inclusion of financial services would be delayed.

Any extension of CCCTB to the financial services sector has been described as worrying by the Irish Taxation Institute that pointed out the IFSC companies contributed €1.1 billion in tax to the country’s exchequer in 2006.

The base would not impose a common tax on every EU country, but would allow companies to follow the same rules for calculating their tax for all their EU-based activities rather than having to apply the individual rules of each country where they have an operation.

Mr Kovacs also said that he believed that there may be no illegal tax havens blacklisted by the G20 at their meeting in London on Thursday, as there had been a good response to the demand for greater transparency.