The 2016 common (consolidated) corporate tax base proposals : a step towards harmonisation of corporate tax policies and their legislative implications for Malta

Abstract

Currently, businesses engaging in cross-border activities within the EU must comply with 27 distinct corporate tax regimes. To remedy this, the Commission revived its proposal for a Common (Consolidated) Corporate Tax Base (CCCTB Package) to further harmonise direct taxation. The CCCTB Package would establish a common tax base for companies with a consolidated revenue exceeding €750 million and apportion the taxable profits among the Member States where said profit was created. This dissertation aims to contextualise the CCCTB Package within the wider ambit of corporate tax harmonisation and evaluate its merits through a binary lens composed of national and European perspectives. The author engages in an analysis on how efforts towards tax harmonisation culminated in the CCCTB Package and further scrutinises the merits of the newly introduced provisions. Such scrutiny centres on provisions regarding aggressive tax planning and tax incentives; as are the allowance on growth and investment, and deductions on research and development expenses. The opinions of Member States to the prospect of a CCCTB Package are categorised on the basis of support or opposition, and further examined in light of international literature. Finally, the foreseeable legislative impact of the CCCTB Package on Malta is also considered in view of the sovereign rights and geographic limitations of the State. The results of the various questions indicate that while the CCCTB Package provides for several advantages over its predecessor through the inclusion of tax favourable provisions, the concerns expressed by Member States regarding the unfairness of the unchanged apportionment formula and infringement of national sovereignty have not been sufficiently addressed. The author thus concludes that the CCCTB Package goes against Maltese interests, although, opines that an amended proposal with due regard to intangible assets and geographical limitations might be the way forward if concerns regarding sovereignty are ever addressed.