19th June 2015

Commission launches new anti-tax avoidance initiatives

As part of a continuing efforts to tackle tax fraud and tax evasion, and partly benefiting from the public pressure present after the recent LuxLeaks revelations (“sweetheart deals” of some states with big multinationals allowing them to legally not pay taxes), the European Commission presented a new set of measures it aims to adopt. The action plan was unveiled at the Commission´s weekly meeting on 17 June. The cornerstone of the action plan is the Common Consolidated Corporate Tax Base (CCCTB) – multinationals in the EU would, following its adoption, pay taxes from a tax base calculated in one single way for the whole EU. Of course, the tax rates would continue to be the set by the respective Member States. Complicated and non-transparent tax rules in some states are widely seen as the best way to legally avoid paying taxes inside the EU. Clear set of rules on the tax base would help eliminate this. CCCTB was already proposed by the Commission in 2011, but has been stuck in the Council (which alone must unanimously approve legislation in taxation area). The Commission plans to withdraw that proposal and launch a new less ambitious one in early 2016. This time, the first step would be a common tax base, consolidation would come at a later stage. CCCTB does not mean taxation harmonization, but is objectively a step in that direction. That is why several states do not like the idea. However, public pressure could speed things up this time.

Apart from the CCCTB plan, the Commission published its first pan-EU list of top 30 global tax havens. Four of them are in Europe – Andorra, Monaco, Liechtenstein and Guernsey. What should follow is a common approach of all EU member states towards these states to help ensure tax transparency. The EU also launched consultation on Country-by-Country Reporting – the Commission asks stakeholders is it should propose legislation that would make multinationals report their incomes on a country-by-country basis.

Many insiders welcome the progress, but some tax transparency advocates lack more resolve. They say the new CCCTB legislative process will slow things down, as well as the public consultation. They fear that preparatory works will last too long and the public pressure will eventually fade away, leading to no changes at all.

For more, click here, here and here.

Members of the American Chamber of Commerce in the Czech Republic