EU Action Plan on Corporate Taxation 5 Key Areas for Action Dieter Kischel European Commission DG TAXUD D1

Action Plan for A Fair and Efficient Corporate Taxation in the EU - 5 Key Areas for Action Communication of [COM(2015)302] Staff Working Document 'Corporate Income Taxation in the European Union', SWD (2015/121) 2

P ROBLEMS Tax systems conceived in 1930s, for clear business models and tangible products Harmful tax competition (increasingly less transparent) Aggressive tax planning Need for more coherent and competitive approach to business taxation (Single Market, BEPS, etc.) 3

O BJECTIVES Re-establishing the link between taxation and where the economic activity takes place Ensuring that Member States can correctly value corporate activity in their jurisdiction Creating a competitive and growth-friendly corporate tax environment for the EU Protecting the Single Market, including o measures to implement OECD BEPS, o to deal with non-cooperative tax jurisdictions o to increase tax transparency 4

5 Action Plan for fair and efficient Corporate Taxation Key Areas 1.CCCTB – a holistic solution to profit shifting 2.Ensuring effective taxation where profits are generated 3.Better tax environment for business (dispute resolution) 4.Progress on tax transparency 5.EU tools for coordination

A CTION 1: CCCTB AS HOLISTIC SOLUTION TO PROFIT SHIFTING Proposed in 2011: o Reduces administrative burden and compliance costs, o Consolidation offers cross-border losses relief, tackles profit-shifting (notably by transfer pricing) within a group o Unified set of anti-abuse provisions, transparency New: staged approach: 1.Continue work on : international / BEPS aspects : 2 new proposals: i.Mandatory CCTB / CCCTB ii.Consolidation; to be discussed later 6

A CTION 2: E NSURING EFFECTIVE TAXATION WHERE PROFITS ARE GENERATED Some MNEs exploit mismatches to shift profits, with no link on where the value is created Leading to low effective taxation 1.Bring taxation closer to where profits are generated and ensure effective taxation of profits Criteria of Code of Conduct to give priority to ensuring effective taxation Revision of I&R Directive and PS Directive 2.Improve TP framework in the EU 3.Linking preferential regimes to value creation (patent boxes) 7

A CTION 3: B USINESS ENVIRONMENT Remove competitive distortions, improve Single Market 1.Cross-border loss offset Until full CCCTB Mechanism to recapture the losses once the group entity is profit-making 2.Improving double-taxation dispute resolution mechanisms Procedures are long, costly and not always resulting in an agreement Arbitration convention is limited to TP disputes Improving the system: clearer rules, more stringent timelines, examine extention of scope and whether EU instrument would be more efficient 8

A CTION 4: PROGRESS ON TRANSPARENCY Adopt March proposal on exchange of information on tax rulings quickly; implementation: More common approach to third country non- cooperative jurisdictions 2012 Action Plan: encourage third countries to apply minimum standards of good governance – followed by Platform of Tax Good Governance Publication of list of top 30 non-cooperative third country tax jurisdictions, compiled from national blacklists (10 occurrences), followed by screening (Code of Conduct): 24 months Coordination of possible counter-measures 2.Corporate tax transparency Public consultation on Country-by-country reporting: IA in

A CTION 5: EU TOOLS FOR COORDINATION Cooperation between MS is essential 1.DAC: cooperation between tax administrations and exchange of best practices. EC will promote a more strategic approach to controlling and auditing cross-border companies 2.Reform of Code of Conduct and Platform on Tax Good Governance CoC: see how to extend mandate and change working methods PTGG: prolong mandate, expand scope and enhance working methods 10

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