EU tax policy in support of EU 2020 Growth Strategy - EU Tax & Customs Commissioner
EU's Commissioner for Taxation and Customs Union, Audit and Anti-Fraud, Algirdas Semeta, unveiled his taxation policy as a part of EU 2020 Growth strategy. He said that the proposed EU Tax policy is in the context of stronger economic policy coordination in the backdrop of the current economic situation and challenges faced by the EU Member States. Some highlights of his tax policy are:
Common Consolidated Corporate Tax Base – CCCTB
Improving business environment is at the heart of the initiative to harmonise the corporate tax base, better known as the 'CCCTB'. The CCCTB is expected to eliminate tax obstacles on cross-border activities within the Single Market and to encourage foreign investments into the EU. The main benefits of CCCTB are:
++ It would ensure that companies opting into the system follow the same rules for calculating their tax bases in every Member State.
++ Cross-border loss relief would be allowed for companies and permanent establishments operating in the EU as a group. This would eliminate the current over-taxation that arises from the inability to set off cross-border losses.
++ Companies within the same group would no longer have to comply with transfer pricing requirements, and cross-border restructuring operations would be made simpler.
Double taxation and non taxation
Unrelieved double taxation in cross-border situations increases the overall tax burden of enterprises operating in the Single Market and can, therefore, have a negative impact on capital investment.
In view of this, it is proposed to address double taxation in the direct tax area as follows:
++ Enhance existing EU instruments to combat double taxation. This includes the Directive on withholding taxes on interest and royalties between associated companies and the Arbitration Convention on transfer pricing.
++ Develop new instruments such as a binding resolution mechanism to eliminate double taxation in the case of a dispute between Member States.
Taxation to serve wider policy goals
Taxation, beyond its primary role in raising fair and legitimate revenues to finance public goods, is an appropriate market based instrument to contribute to achieving specific policy objectives.
Use of environmental taxation can support environmentally sustainable growth as well as promote employment. Expanding environmental taxation can indeed make a contribution towards more growth-oriented tax systems. The introduction of a CO2-tax element would help meeting the EU's goals in the climate change and energy policies. It will also be an opportunity to consider environmental taxation in the shift of the tax burden away from labour taxation.
The Commission recently proposed to introduce a financial transaction tax in the EU as a first step to cover the widest possible range of financial instruments (shares, bonds, structured products, derivatives agreements etc). This initiative will ensure that financial institutions make a fair and substantial contribution to public revenues.
Tax is back on the EU agenda. The Commission is convinced that this policy can greatly contribute to the consolidation and growth objectives of the Union.