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European Union Parliament: A harmonised corporate tax system plan to tax digital firms

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The European Parliament approved Thursday a harmonised corporate tax system plan to tax digital firms where they earn their profits and to calculate their tax bills according to their online activities.

Members of European Parliament (MEPs) backed the “Common Consolidated Corporate Tax Base” (CCCTB), which is part of a wide-ranging proposal to create a single, clear and fair EU corporate tax regime, as well as a separate, complementary measure which creates the basis for the harmonised corporate tax system – the Common Corporate Tax Base.

Together, the two measures are aimed at plugging gaps which allow some digital and global companies to drastically reduce their tax bills or avoid paying taxes where they create their profits. This would partly be achieved through proposed benchmarks which would identify whether a firm has a “digital presence” within an EU member state and is therefore liable for tax.

Alain Lamassoure MEP, Parliament’s rapporteur on CCCTB, said this was a great opportunity “to make a giant leap in the field of corporate taxation; not only would this legislation create a model that is more suitable to today’s economies through the taxing of the digital economy, but it would also halt unfettered competition between corporate tax systems within the single market, by targeting profits where they are made.”

The current corporate tax system is outdated, said the rapporteur on CCTB Paul Tang, and it leaves citizens and small companies worse off: “The EU is our best chance to make our tax system more just and more modern.”

The Parliament also wants the European Commission to set those benchmarks (such as the number of users or the volume of digital content collected) to produce a clearer picture of where a company generates its profits. Personal data is a highly valuable asset mined by companies like Facebook, Amazon and Google to create their wealth, but it is currently not considered when calculating their tax liabilities.

Companies would calculate their tax bills by adding up the profits and losses of their constituent companies in all EU member states. The resulting tax would then be shared between member states depending on where the profits were generated. The aim is to stamp out the current practice of firms moving their tax base to low-tax jurisdictions.

Once the proposals take effect, a single set of tax rules would apply in all EU member states. Firms would no longer have to deal with 28 different sets of national rules and would only be accountable to a single tax administration (a one-stop shop).

The resolutions will now be passed on to the Council and Commission for their consideration.

The post European Union Parliament: A harmonised corporate tax system plan to tax digital firms appeared first on maltawinds.com.

Original article found on Malta Winds

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