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The European commissioner responsible for taxation, Algirdas Šemeta, has outlined proposals on a common consolidated base for corporation tax, VAT, energy taxation, double taxation and customs.
In an address to delegates at the Single Market: Time to Act! conference, Mr Šemeta said the ‘tax-related costs that businesses bear when they operate cross-border are still far too high’.
He felt the administrative burdens and compliance costs linked to having to deal with up to 27 different tax systems across Europe discouraged small and medium-sized enterprises from expanding across borders.
As such, he intended to propose a common consolidated corporate tax base (CCCTB), claiming it potential benefits would be:
- companies would only have to apply one set of tax rules and deal with only one tax administration across the European Union (EU);
- an EU group of companies would no longer have to deal with the transfer pricing compliance requirements of several different member states; and
- cross-border loss relief would be allowed within the group.
Mr Šemeta stressed his plan would not involve harmonising tax rates in Europe.
He went on tell the conference’s delegates that the VAT system needed to be modernised, and he referred to the existing green paper on the subject and the public debate on the future of the tax. He predicted that the European Commission will publish a new VAT strategy by the end of 2011.
With regards to energy taxation, Mr Šemeta said the revision of the EU Energy Taxation Directive was vital, and he concluded that the current framework needs to be restructured so that energy sources were treated in a consistent manner, according to their quality rather than their quantity.
Energy consumers should be treated equally regardless of the source of energy that they consume. Energy taxation should contribute to CO2 reduction target policy, he said.
Finally, Mr Šemeta addressed double taxation, highlighting the issue of access to long-term financing. He said the venture capital industry claimed cross-border tax difficulties, including double taxation, made it difficult to operate and invest freely across the EU – and double taxation also causes problems for EU citizens working, retiring and shopping across borders.
