EU Focuses on Corporate Taxation
On 17 June 2015, the Commission adopted an Action Plan for fair and efficient corporate taxation in the EU. Today`s corporate tax systems in EU Member States were conceived in the 1930`s, when cross-border trade was more limited, business models were simpler and products were tangible. The current rules do not work in a globalized, digital and mobile business environment.
The aim of the Action Plan is to establish a new approach to corporate taxation in the EU in order to tackle tax avoidance. It also will help to ensure sustainable revenues and foster a better business environment in the Single Market.
In the future, this means for example that companies should pay taxes in the country where they generate profits. The taxation in general should be more growth-friendly and this should not be compromised by competition for mobile tax bases. One country`s preferential regime should not lead to revenue losses for other countries and the honest businesses should not lose out to tax-avoiding.
The Action Plan will fundamentally reform corporate taxation in the EU. The renovation means that the Member States need to open up and work together. All 28 EU countries need to share details of tax rulings they grant to multinationals. Under the proposal of the Commission, national tax authorities would be required to file quarterly reports detailing all tax rulings they have issued to large cross-border companies and which countries could be effected by the decision. We at the Finnish Procurement Lawyers are following the taxation reform, since it will have an effect to our customers and their businesses across the borders.