The CCCTB Relaunch : A Critical Assessment and Some Suggestions for Modification

Winds of change have been blowing through the world of international company taxation, with company tax planning and country tax competition increasingly attracting questions from the general public, the media, politics and academia. The most systemic corporate tax reform proposal in the EU so far has come from the European Commission: on 25 October 2016, as part of a broader package of corporate tax reforms, the Commission released proposals for a Council Directive on a Common Corporate Tax Base (CCTB) and a Council Directive on a Common Consolidated Corporate Tax Base (CCCTB), thus relaunching its original CCCTB proposal of 16 March 2011 in two stages. The CCTB/CCCTB proposals have not, however, been particularly warmly welcomed in the EU Member States. The Commission regards the CCCTB as the holistic solution for BEPS issues in the EU, while the impact assessment it presented stated that the expected economic benefits of a CCCTB for the internal market would be slightly positive (assuming an absence of tax planning under a CCCTB and tax rate adjustments in EU Member States to stabilise corporate tax revenues). Yet various EU Member State parliaments raised formal objections to the CCTB/CCCTB proposals, while others were very critical, but did not formally issue an objection. The objections raised show that at least a number of Member States are quite explicit in considering the proposals to fall outside EU competences. What has gone wrong? How come a perceived holistic and growth-friendly solution to a societally relevant problem is facing such political resistance in the EU Member States, or at least in a significant number of them? This paper asks whether the CCTB/CCCTB proposals adequately respond to societal calls for a properly functioning company taxation system in the EU; in other words, a system that reflects the spirit of the internal market, as well as the needs and interests of the individual EU Member States? If the answer to this question is negative, how, then, should we seek to tax multinationals in the internal market?