The main goals of the EU for a tax system suitable for the Digital Single Market are fairer taxation, level playing field for all businesses, sustainability of public revenue, preventing tax avoidance, enhancing more effective, efficient taxation and tax certainty. All these targets, if reached, would benefit the EU, Member States and companies.
European tax system must be fair
The OECD has introduced proposals for updating international taxation due to impact of the digitalisation to the economy. Yet the new Commission is proposing to implement an EU digital tax in case an OECD agreement is not reached. Such a regional digital tax would inevitably cause counter actions from EU´s trading partners. The EC’s CCCTB directive proposal (Common Consolidated Corporate Tax Base) would change corporate taxation entirely EU wide.
As a first step, CCTB (Common Corporate Tax Base) would harmonise calculation of the corporate tax base. Next step is to sum up the tax bases of all group companies. This consolidated tax base would be allocated to Member States based on “last century” factors: sales, tangible assets, employees (and users), not taking into account intangible assets like IPR. The digitalised economy relies heavily on intangible assets. They must be given fair weight when determining where the taxation rights lie.