Bringing transparency, coordination and convergence to corporate tax policies in the European Union: II - Evaluation of the European Added Value of the recommendations in the ECON legislative own-initiative draft report

21-01-2016

This Study evaluates the European Added value of the recommendation in the draft report of the European Parliament on bringing transparency, coordination and convergence to corporation tax policies in the Union. This study finds that the single most effective contribution to mitigating aggressive tax planning strategies and therefore lost revenues to Member States, which are estimated to be in the region of 50-70 billion euro per annum to 160-190 billion euro per annum on an assumption of no base from sources other than profit shifting, would be enacting a common consolidated corporate tax base (CCCTB), across the entire Union. Moreover, this is a conservative estimate. The cost-effective regulations proposed the Rapporteur’s draft proposals can be expected to add 0.6 per cent - 1.1 per cent to Member States potential public investment spending power, according to research assessments. Based on OECD methodology, the enactment of these proposals are capable of improving corporation tax receipts by between 13.4 billion euro and 33.5 billion euro per annum. The Study finds that transparency and uneven implementation is one of the most serious challenges faced by the EU in the field of business taxes. This applies to methodologies, what information is made available by Member States, enforcement practices adopted by Member States and the recent innovation of ‘free-ports’ which has created a parallel trading system.

This Study evaluates the European Added value of the recommendation in the draft report of the European Parliament on bringing transparency, coordination and convergence to corporation tax policies in the Union. This study finds that the single most effective contribution to mitigating aggressive tax planning strategies and therefore lost revenues to Member States, which are estimated to be in the region of 50-70 billion euro per annum to 160-190 billion euro per annum on an assumption of no base from sources other than profit shifting, would be enacting a common consolidated corporate tax base (CCCTB), across the entire Union. Moreover, this is a conservative estimate. The cost-effective regulations proposed the Rapporteur’s draft proposals can be expected to add 0.6 per cent - 1.1 per cent to Member States potential public investment spending power, according to research assessments. Based on OECD methodology, the enactment of these proposals are capable of improving corporation tax receipts by between 13.4 billion euro and 33.5 billion euro per annum. The Study finds that transparency and uneven implementation is one of the most serious challenges faced by the EU in the field of business taxes. This applies to methodologies, what information is made available by Member States, enforcement practices adopted by Member States and the recent innovation of ‘free-ports’ which has created a parallel trading system.