CCTB back on the agenda again

censuspro · 19-03-2010 10:27AM #1

It appears that the EU is determined to push through a common corporation tax base.

http://www.accountancyage.com/accountancyage/news/2259482/ireland-enraged-eu-unveils-tax%22%20class=%22

So much for the "guarantees"

prinz · 19-03-2010 10:38AM

censuspro wrote: »

It appears that the EU is determined to push through a common corporation tax base.

Any links to this so-called plan? More info on it?

Edit: I am presuming Accountancy Age is referring to one of these speeches? None of which mention a CCTB

http://europa.eu/rapid/pressReleasesAction.do?reference=SPEECH/10/51&format=HTML&aged=0&language=EN&guiLanguage=en

http://europa.eu/rapid/pressReleasesAction.do?reference=SPEECH/10/56&format=HTML&aged=0&language=EN&guiLanguage=en

http://europa.eu/rapid/pressReleasesAction.do?reference=SPEECH/10/109&format=HTML&aged=0&language=EN&guiLanguage=en

sink · 19-03-2010 10:41AM

censuspro wrote: »

It appears that the EU is determined to push through a common corporation tax base.

http://www.accountancyage.com/accountancyage/news/2259482/ireland-enraged-eu-unveils-tax%22%20class=%22

So much for the "guarantees"

The rules in regards to CCTB have not changed. The legislative procedure is the exact same now under Lisbon as it was under Nice. Lisbon had no impact. It will still require a referendum in this country if it is ever to be introduced.

ei.sdraob · 19-03-2010 10:44AM

apparently they will also be pushing euthanasia on us via an Australian doctor

damn it those nutcases were right :P

sirromo · 19-03-2010 10:52AM

prinz wrote: »

Edit: I am presuming Accountancy Age is referring to one of these speeches? None of which mention a CCTB

http://europa.eu/rapid/pressReleasesAction.do?reference=SPEECH/10/51&format=HTML&aged=0&language=EN&guiLanguage=en

http://europa.eu/rapid/pressReleasesAction.do?reference=SPEECH/10/56&format=HTML&aged=0&language=EN&guiLanguage=en

http://europa.eu/rapid/pressReleasesAction.do?reference=SPEECH/10/109&format=HTML&aged=0&language=EN&guiLanguage=en

Read his speech from the first link:

In addition, I will seek to address the long-standing issues of double taxation and discrimination. The implementation of rules for computing tax bases that are common for all Member States, as envisaged by the Common Consolidated Corporate Tax Base initiative, would be a major step to the removal of cross-border tax obstacles for business.

censuspro · 19-03-2010 10:59AM

sink wrote: »

The rules in regards to CCTB have not changed. The legislative procedure is the exact same now under Lisbon as it was under Nice. Lisbon had no impact. It will still require a referendum in this country if it is ever to be introduced.

Problem is if it's introduced in other countries.

prinz · 19-03-2010 11:01AM

sirromo wrote: »

Read his speech from the first link:...

Yes, but that doesn't say anything about the CCTB as it was being back on the table/forced upon us, rather appears to me as aspects of it may be revisited to improve coordination in the taxation area, and as Sink pointed out any change would still require a referendum.

prinz · 19-03-2010 11:07AM

censuspro wrote: »

Problem is if it's introduced in other countries.

Are you suggesting that we should have a say in what other countries do with regards to their Corporation Tax rate?

sink · 19-03-2010 11:17AM

censuspro wrote: »

Problem is if it's introduced in other countries.

That's their prerogative, it has zero impact on us. Don't forget we're no alone in opposition to CCTB, many other nations are with us including Britain, Denmark and all the newer eastern states.

censuspro · 19-03-2010 12:46PM

prinz wrote: »

Are you suggesting that we should have a say in what other countries do with regards to their Corporation Tax rate?

Yes that's exactly what I suggested.

FYI, CCTB does not change the tax rate, it determines where profits are taxed.

prinz · 19-03-2010 12:57PM

censuspro wrote: »

Yes that's exactly what I suggested..

Should other countries have an equal input into our taxation system?

censuspro wrote: »

FYI, CCTB does not affect the tax rate, it affects where profits are taxed.

Given it's basis in 'fair competition' the natural eventual outcome IMO would be harmonisation or at least a set of parameters for the CT rate itself.

censuspro · 19-03-2010 02:31PM

prinz wrote: »

Should other countries have an equal input into our taxation system?

Given it's basis in 'fair competition' the natural eventual outcome IMO would be harmonisation or at least a set of parameters for the CT rate itself.

The tax rate would need to be changed by referendum unless it was done so in the budget. So you're wrong on both counts.

Larger nations could go ahead with CCTB via enhanced co-operation.

prinz · 19-03-2010 02:41PM

censuspro wrote: »

So you're wrong on both counts..

In which case it would be due to nobody but our own elected representatives... so what was your point about the "guarantees" then?

You made the point about the "guarantees" as if we would be forced into a change by Europe, now you are saying that the government could change it of their own free will, well yes they could, but your points don't link up in that case.

censuspro wrote: »

Larger nations could go ahead with CCTB via enhanced co-operation.

Yes. Again I'm baffled by your point tbh. If that's what some nations wish to do..

sink · 19-03-2010 03:08PM

censuspro wrote: »

The tax rate would need to be changed by referendum unless it was done so in the budget. So you're wrong on both counts.

Larger nations could go ahead with CCTB via enhanced co-operation.

Any agreement restricting our governments competence to control direct tax would no doubt be considered by the supreme court as a diminishment of sovereignty. Our constitution states that the source of our countries sovereignty is the people of the Irish Republic any diminishing of said sovereignty would require the people to be consulted via plebiscite as per Crotty v. An Taoiseach 1987.

censuspro · 19-03-2010 04:18PM

prinz wrote: »

In which case it would be due to nobody but our own elected representatives... so what was your point about the "guarantees" then? You made the point about the "guarantees" as if we would be forced into a change by Europe, now you are saying that the government could change it of their own free will, well yes they could, but your points don't link up in that case.

Yes. Again I'm baffled by your point tbh. If that's what some nations wish to do..

I take it you're not familiar with sarcasm?

It means that there is less revenue for the Irish exchequer because profits of Irish resident companies are no longer being tax in Ireland. Regardless of the CT rate, 12.5% x 0 = 0!!!

censuspro · 19-03-2010 04:29PM

sink wrote: »

Any agreement restricting our governments competence to control direct tax would no doubt be considered by the supreme court as a diminishment of sovereignty. Our constitution states that the source of our countries sovereignty is the people of the Irish Republic any diminishing of said sovereignty would require the people to be consulted via plebiscite as per Crotty v. An Taoiseach 1987.

CCTB does not affect our direct taxes, it affect where the profits are taxed!

K-9 · 19-03-2010 04:35PM

censuspro wrote: »

CCTB does not affect our direct taxes, it affect where the profits are taxed!

Corporation Tax is a Direct Tax. If you change it to a destination tax like VAT, it ceases to be a Direct tax.

Scofflaw · 19-03-2010 05:21PM

censuspro wrote: »

CCTB does not affect our direct taxes, it affect where the profits are taxed!

It could be said to affect the capacity of the Irish state to control its tax base.

cordially,
Scofflaw

censuspro · 19-03-2010 05:39PM

K-9 wrote: »

Corporation Tax is a Direct Tax. If you change it to a destination tax like VAT, it ceases to be a Direct tax.

?

censuspro · 19-03-2010 05:45PM

Scofflaw wrote: »

It could be said to affect the capacity of the Irish state to control its tax base.

cordially,
Scofflaw

It could also be said otherwise, which is what the larger nations are currently trying to do.

The issue of tax harmonisation is not just a Lisbon issue, this has on the agenda for years even before the Nice treay.

A CCTB would not be a good thing for Ireland!

K-9 · 19-03-2010 05:55PM

censuspro wrote: »

?

You said CCTB does not affect Direct Taxes. Corporation Tax is a Direct Tax.

censuspro · 19-03-2010 06:00PM

K-9 wrote: »

You said CCTB does not affect Direct Taxes. Corporation Tax is a Direct Tax.

Read my post again.

K-9 · 19-03-2010 06:10PM

censuspro wrote: »

Read my post again.

Ok, where would profits be taxed?

Scofflaw · 19-03-2010 06:14PM

K-9 wrote: »

You said CCTB does not affect Direct Taxes. Corporation Tax is a Direct Tax.

It should probably read "CCCTB doesn't affect our tax rates".

cordially,
Scofflaw

censuspro · 20-03-2010 01:21AM

K-9 wrote: »

Ok, where would profits be taxed?

Under a CCCTB the profits are taxed in the country that they are made. e.g. Profits made in Germany are taxed in Germany.

Currently, if a company is resident in Ireland for Corporation Tax purposes they pay tax on their world wide profits in Ireland. Under a CCCTB, Irish resident companies would pay tax in the countries that the profits are made. This means that our low CT rate of 12.5% is no longer an advantage because companies that are resident in Ireland for tax purposes would also be taxed in other countries under a CCCTB. What the larger nations would like to do under a CCCTB is for them all to get together and agree that because none of them are receving any corporate tax revenue from large multinationals becuase their all located in low tax jurisdictions e.g. Ireland, they agree to a CCCTB (Common Consolidated Corporate Tax Base) in which they will divvy up the profits made in each country and the company pays taxes in that country. At least that way they are getting some tax revenue as opposed to getting none at all.
So although they cannot change our Corporation Tax rate of 12.5%, they can change the jurisdiction in which the profits are taxed.

View · 20-03-2010 02:01AM

censuspro wrote: »

Under a CCCTB the profits are taxed in the country that they are made. e.g. Profits made in Germany are taxed in Germany.

Currently, if a company is resident in Ireland for Corporation Tax purposes they pay tax on their world wide profits in Ireland. Under a CCCTB, Irish resident companies would pay tax in the countries that the profits are made. This means that our low CT rate of 12.5% is no longer an advantage because companies that are resident in Ireland for tax purposes would also be taxed in other countries under a CCCTB. What the larger nations would like to do under a CCCTB is for them all to get together and agree that because none of them are receving any corporate tax revenue from large multinationals becuase their all located in low tax jurisdictions e.g. Ireland, they agree to a CCCTB (Common Consolidated Corporate Tax Base) in which they will divvy up the profits made in each country and the company pays taxes in that country. At least that way they are getting some tax revenue as opposed to getting none at all.

That was one of a number of methods suggested in a discussion document about the topic. There were others also.

I have only seen one paper that attempted to analyse the effect of these methods. Most were marginally positive or negative for Ireland. Only one had a real adverse effect. On the other hand, Germany wasn't so lucky :-)

censuspro · 20-03-2010 11:55AM

View wrote: »

That was one of a number of methods suggested in a discussion document about the topic. There were others also.

I have only seen one paper that attempted to analyse the effect of these methods. Most were marginally positive or negative for Ireland. Only one had a real adverse effect. On the other hand, Germany wasn't so lucky :-)

The Irish Taxation Institute has publicly stated that they are not in favour of a CCCTB and states that how this would not be a good thing for Ireland. You can read their report here,

The other issue with a CCCTB is that it's merely an attempt for larger nations who are annoyed by Irelands low CT rate to get their hands on some extra cash. They are just changing the rules because they are not in a position to compete. A CCCTB makes no attempt to attract or incentivise companies to set up shop in their countries e.g. France or Germany.

As the report says, its not just a bad thing for Ireland but as
"Big multi-nationals, faced with growing costs in Europe, are increasingly looking to the Far East. CCCTB will merely serve to hasten this trend".

K-9 · 20-03-2010 12:55PM

censuspro wrote: »

Under a CCCTB the profits are taxed in the country that they are made. e.g. Profits made in Germany are taxed in Germany.

Currently, if a company is resident in Ireland for Corporation Tax purposes they pay tax on their world wide profits in Ireland. Under a CCCTB, Irish resident companies would pay tax in the countries that the profits are made. This means that our low CT rate of 12.5% is no longer an advantage because companies that are resident in Ireland for tax purposes would also be taxed in other countries under a CCCTB. What the larger nations would like to do under a CCCTB is for them all to get together and agree that because none of them are receving any corporate tax revenue from large multinationals becuase their all located in low tax jurisdictions e.g. Ireland, they agree to a CCCTB (Common Consolidated Corporate Tax Base) in which they will divvy up the profits made in each country and the company pays taxes in that country. At least that way they are getting some tax revenue as opposed to getting none at all.
So although they cannot change our Corporation Tax rate of 12.5%, they can change the jurisdiction in which the profits are taxed.

Wonder could they do this under enhanced cooperation though? Could they do it within EU rules?

censuspro · 20-03-2010 04:57PM

K-9 wrote: »

Wonder could they do this under enhanced cooperation though? Could they do it within EU rules?

I don't see why not. Lisbon treaty has been ratified which enables en-hance co operation with a minimum of eight countries.

K-9 · 20-03-2010 05:43PM

censuspro wrote: »

I don't see why not. Lisbon treaty has been ratified which enables en-hance co operation with a minimum of eight countries.

Seeing as it's to do with Corporation tax rules, I have my doubts they could. Definitely open to challenge I'd say.

Scofflaw · 21-03-2010 01:47AM

K-9 wrote: »

Wonder could they do this under enhanced cooperation though? Could they do it within EU rules?

No, because you can't use enhanced co-operation:

(1) to interfere with another state's sovereign powers - which means that if Ireland does not join the CCCTB group it cannot be made to give up the corporation tax it charges on the company's EU-wide profits,

(2) or to abrogate existing tax treaties. Using enhanced cooperation in such a way would be exactly equivalent to, say, the Spanish government deciding it will tax corporate profits made in Spain by an Irish-based company, something which is precluded by a bilateral tax treaty between Ireland and Spain:

Double Taxation Agreements

- An extensive double taxation treaty network ensures the elimination or mitigation of double taxation with 50 countries

To facilitate international business, Ireland has signed comprehensive double taxation agreements with 50 countries (as of May 2009), of which 46 are in force which provide for the elimination or mitigation of double taxation with the following countries: Australia, Austria, Belgium, Bulgaria, Canada, Chile China, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Georgia, Germany, Greece, Hungary, Iceland, India, Israel, Italy, Japan, Korea, Latvia, Lithuania, Luxembourg, Malaysia, Malta, Mexico, Macedonia, Netherlands, New Zealand, Norway, Pakistan, Poland, Portugal, Romania, Russia, Slovak, Republic Slovenia, South Africa, Spain, Sweden, Switzerland, The Republic of Turkey, United Kingdom, United States, Vietnam and Zambia.

Ireland is continuingly expanding this agreement network: Eight new tax agreements have been concluded. (Albania, Azerbaijan, Bosnia Herzegovina, Kuwait, Moldova, Morocco, Serbia and Thailand)

Six new agreements are in the pipeline. (Argentina, Armenia, Belarus, Egypt, Singapore, Tunisia, Ukraine)

Other countries have also been identified by Ireland as having potential for double tax agreements. (Brazil, Hong Kong, Iran, and the Philippines).

A tax cooperation agreement has been signed with the Isle of Man.

In addition, where a double tax agreement does not exist with a particular country, unilateral provisions within the Irish Taxes Acts allow credit relief against Irish tax for foreign tax paid in respect of certain types of income.

You'll note that all 26 other member states of the EU are covered by such double-taxation treaties, all of them having the force of law.

So an EU country that enters a CCCTB enhanced cooperation group cannot require Ireland to stop taxing the full EU profits of an Irish-based corporation (including the profits made in their country), and cannot engage in double taxation of an Irish-based corporation without unilaterally repudiating its existing bilateral taxation treaty with Ireland (and making itself extremely unpopular with FDI).

cordially,
Scofflaw

CCTB back on the agenda again

Comments