Labour MEPs have reiterated calls for the UK to maintain its existing EU anti-tax avoidance measures and stop blocking further proposals, following the European Commission’s announcement of a new fair tax base to prevent aggressive tax avoidance.
Under the Common Consolidated Corporate Tax Base (CCCTB), a company will pay tax in the country in which it generates its profit, at the corporation tax rate of that country. The CCCTB will also create a common set of rules for corporation tax in the EU, and a common definition of certain tax exemptions, to make sure the rules can't be exploited to have an effect of double taxation, or double non-taxation.
Britain has been blocking the original CCCTB proposal since 2011 and the new two-stage approach is expected to make it easier for the European Council to pass the full programme.
My colleague Anneliese Dodds MEP, Labour’s European Parliament spokesperson on taxation, said:
“If the EU gets this right, the fair tax base could be a genuine game-changer. Done well, it could be a massive blow against those who seek to exploit loopholes and inconsistencies so as to avoid paying their fair share of tax, paying minimal sums on massive profits. These new rules will also make life easier for companies operating around the EU, as they won't have to deal with 28 sets of rules on corporation tax.
“Following the leaks of documents from Panama, Luxembourg and the Bahamas, there is growing public pressure on the UK government to take serious action by working with other EU countries, and Theresa May must heed these calls.
“Britain should continue to take part in EU-wide tax measures that tackle aggressive tax avoidance and evasion and be supportive and constructive in the upcoming negotiations. It is only by working collaboratively with our European allies that we can reclaim the billions of pounds of tax revenue lost each year to cross-border tax evasion.”
The European Parliament has long been in favour of introducing a CCCTB, most recently calling for it in the report co-written by Anneliese Dodds on 'Bringing transparency, coordination and convergence to corporate tax policies'.