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International tax conference on CCCTB held in Berlin — Orbitax Tax News & Alerts

On 15-16 May 2007, the German Federal Ministry of Finance hosted in Berlin an international tax conference on the Common Consolidated Corporate Tax Base (CCCTB), organized in cooperation with the Centre for European Economic Research (ZEW) and Max-Planck-Institute for Intellectual Property, Competition and Tax Law.

The German Federal Minister of Finance Peer Steinbrück started his opening speech with a brief assessment of the past achievements and future prospects of the European integration. He noted that, although Europe has a successful economic and social model, it certainly needs further reforms to maintain its competitive edge in the globalizing world economy. With regard to direct taxation, Steinbrück suggested adopting a pragmatic approach which, while fully respecting national fiscal interests, would seek to balance them with the imperatives of the single market. The CCCTB project should be guided by the same principles. Steinbrück highlighted the advantages of the CCCTB, such as the reduction of compliance costs for taxpayers and the possible mitigation of destructive downward tax competition among the Member States, and outlined the key issues to be addressed in the future.

In his keynote address, the EU Commissioner for Taxation and the Customs Union László Kovács summarized the main points of the Commission's second progress report on the CCCTB and elaborated on how the CCCTB would contribute to the achievement of the Lisbon objectives. According to Kovács, the CCCTB project would enhance the efficiency and competitiveness of companies with cross-border activities by eliminating the obstacles arising from 27 different tax systems. The CCCTB would also support the expansion of domestically operating companies to other Member States, due to lower compliance costs. In spite of a number of open technical problems and strategic choices, Kovács was convinced of the necessity to make a formal legislative proposal on the CCCTB, preceded by a comprehensive impact assessment, as soon as possible in 2008. He emphasized that the work on the CCCTB would not be extended to cover tax rates and that the CCCTB would be optional.

In his lecture, Prof. Christoph Spengel of the University of Mannheim/ZEW highlighted the differences in nominal tax rates and taxable base determination rules in the Member States, and their influence on the effective tax burden and investment decisions of companies. Other issues related to the implementation of the CCCTB, such as the use of International Financial Reporting Standards (IFRS) for determination of taxable income, consolidation and apportionment, were also addressed.

Panel discussions featuring representatives of tax administrations, international organizations, business and academia focused on (i) determination of taxable corporate income, (ii) international aspects, consolidation and allocation, and (iii) administrative aspects of the CCCTB.

Concluding remarks were delivered by the German State Secretary Dr Alex Nawrath, who, in particular, emphasized the need to strike an appropriate balance between the tax revenues of the Member States and the reduction of the administrative burden for the companies that would opt for the CCCTB.