Common Consolidated Corporate Tax Base is Form of Stealth Harmonisation

The proposed common consolidated corporate tax base is a form of stealth harmonisation for multinationals, according to Taxand. In a survey of Taxand’s clients across the world currently being conducted, so far, around 70% of multinational companies within Europe were in favour of the idea of harmonisation. However, they are also concerned about the rising cost of compliance.

Frédéric Donnedieu de Vabres, chairman of Taxand, said: “The EC’s proposed common consolidated corporate tax base marks a form of stealth tax harmonisation for multinationals across Europe. A number of Europe’s leaders, including Nicolas Sarkozy, have been putting pressure on countries across the region, such as Ireland, to fall in line on corporate tax rates. Now, following universal reticence towards that push, the EC [European Commission] have found a way to force the hand of these jurisdictions by ensuring that multinationals have no choice on where to locate to receive beneficial corporate tax incentives.

“However, while this might be welcomed by multinationals for simplicities sake, it will undoubtedly restrict their movements and so this blanket Europe-wide tax base for multinationals will hit certain countries harder than others, impeding their recovery from a torturous few years of economic downturn.

“This undoubtedly has implications for a number of smaller economies within the EC, who are striving to attract inward investment and may now be hindered by a blanket approach that may well drive multinationals back to larger, higher profile economies,” he concluded.


Related reading