European Commission Corporate Taxation Action Plan: Long-awaited but disappointing for tax collectors and the citizen-taxpayers

Today, the European Commission published its long-awaited roadmap for fairer corporate taxation in Europe. Unfortunately, CESI's hopes that the Commission would publish an action plan that is worthy of its name was to a large extent disappointed. Less procrastination is required with regards to the introduction of a common corporate consolidated tax base (CCCTB) and concrete proposals for an encompassing country-by-country reporting system are needed to enable tax administrations to effectively collect all due corporate taxes. Otherwise, multinationals will continue to make profits at the expense of the citizen-taxpayers; tax injustice would remain.

European Commission Corporate Taxation Action Plan: Long-awaited but disappointing for tax collectors and the citizen-taxpayers

The time to move to a system of fair and effective taxation for multinational companies has probably never been better than now. Following the LuxLeaks-revelations towards the end of last year, problems related to unethical tax practices by many multinational companies in Europe have been exceptionally high on the political agenda. During the last months, the public outcries have increased with each additional dubious tax practice involving a multinational being revealed. 

In this context, the European Commission in its corporate taxation action plan from today correctly analysed many of the challenges that lie ahead in the EU. These pertain especially to the fast introduction of an encompassing and mandatory CCCTB and an effective system of country-by-country reporting.

A full and timely CCCTB would restore tax justice for the tax-paying citizens 

A CCCTB would ensure that multinationals are limited in transfer pricing in cross-border sales and ensure that they do effectively pay taxes where profits are made – and that these taxes are determined with the help of a mandatory minimum tax rate. Tax justice would be restored for the tax-paying citizens. However, for reasons yet to be established, the Commission decided to postpone concrete CCCTB proposals by 18 months, arguing that a fully-fledged CCCTB would currently not get a majority in the Council of Ministers. CESI wonders why Member States should be more willing to agree to an encompassing CCCTB in 1,5 years when there will be perhaps even less pressure from the public than is the case today. The Commission should be more willing to push for a full CCCTB now, taking advantage of the current momentum of public outrage. 

CESI President Romain Wolff: Without encompassing country-by-country reporting, tax collectors grope in the dark

An encompassing country-by-country reporting system -full transparency concerning multinationals’ tax payments and tax rulings of the various EU Member States- would enable the national tax administrations to effectively go after corporate tax evaders and collect all due taxes. “What tax inspectors need to operate is a system of encompassing country-by-country reportingWithout more transparency, they continue to grope in the dark. However, the Commission does not propose immediate action in this regard.” Instead, it opened another consultation on the topic, which will be followed by another impact assessment. Even after that consultation and the impact assessment, the Commission refuses to promise to come forward with concrete policy proposals. As a European trade union confederation representing several national tax administration trade unions, CESI lacks any understanding for such delays and backdoor shelving options.

N.B.: The official documents related to the Commission’s action plan can be accessed hereFurther information about CESI’s position advocated in this statement is available in a resolution it recently adopted on fair and effective tax systems in Europe.