EU Common tax base proposal will do little to curb tax evasion – Hayes

Following the publication today of the EU’s ‘Action Plan for Fair and Efficient Corporate Taxation’, Brian Hayes MEP for Dublin said that proposals for a common corporate tax base will not have the desired effect of curbing tax evasion.

“Developing a common corporate tax base is not the optimal approach to tackle aggressive tax planning by multinational companies. This will not curb the large divergences between effective corporate tax rates and headline corporate tax rates which exist in many EU Member States. Ireland’s transparent tax regime ensures that our effective corporate tax rate remains close to the headline rate.

The Commission’s Action Plan envisages the publication of draft legislation on a common consolidate corporate tax base (CCCTB) in early 2016.

“At the same time, this cannot be an attempt to harmonise corporate tax rates through the backdoor. It needs to be often repeated – corporate tax rates are an issue for Member States and for Member States alone. The EU has no competence in this regard.

“Many aspects of the Commission’s Action Plan are welcome – it is timely that the EU steps up its coordination with the OECD on base erosion and profit shifting. The problem of multinationals evading tax needs to be solved at an international level through commonly agreed principles; the EU should be working at the same pace as international partners.

“We should remember that any action against Member States’ corporate tax policies will have an effect on jobs, growth and investment. A balance needs to be struck between creating a business friendly environment and ensuring that taxes are paid where the economic activity takes place.”

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