Ireland’s Minister for Finance Michael Noonan today expressed opposition to EU Commission proposals for a common consolidated corporate tax base (CCCTB) and for public country-by-country reporting, arguing that both measures are counterproductive as they depart from international agreements reached in OECD/G20 base erosion profit shifting (BEPS) project.
The Commission proposal for public country-by-country reporting, introduced April 12, 2016, is aimed at enhancing transparency and public scrutiny of the tax affairs of large MNEs. The proposal for a CCCTB, introduced October 25, 2016, would mandate EU-wide rules for determining the tax base, thus limiting MNE group tax planning opportunities.
According to Noonan, though, both measures depart from the BEPS consensus, and thus should be considered only with great caution.
“No man can serve two masters, and no country can implement two competing philosophies on how companies should be taxed,” Noonan said in comments before the Department of the Taoiseach.
According to Noonan, the EU proposal for a CCCTB is similar to earlier proposals to allocate taxes based on a formula. Such proposals have been “rejected by the BEPS process in favor of stronger, more modern, transfer pricing rules,” Noonan said.
The EU public country-by-country reporting proposal would also run counter to the BEPS consensus, Noonan said, noting that countries have threatened to withhold exchanging country-by-country reports with EU states altogether should the reports be made public.
“There is a danger that proposals for any reforms that are inconsistent with the BEPS recommendations could create a backwards momentum – countries may not take the vitally important step of implementing what has already been agreed and which they had committed to implementing. In the worst cases we could even see countries abandoning positive processes they had only recently begun implementing,” Noonan warned.