TaxCorporate TaxEU tax plan would increase compliance costs

EU tax plan would increase compliance costs

A plan to centralise tax administration in the EU could increase compliance cost for companies using low tax jurisdictions

COMPLIANCE costs would rise under a new European plan to simplify tax administration for international businesses, according to research from Ernst & Young.

Under the plan, known as the common consolidated corporate tax base, international business would be given the opportunity to have their tax managed centrally instead of seperately for each EU state. Tax revenues would then be parcelled out to the EU members in which companies operate.

The proposal has been around for some years but was suspended in 2008. A new version is due to be aired next month but the E&Y study appears to cast doubt on whether it would cut the compliance burden

Conducted for Irish business groups, where the tax rate is 12.5%, the study suggests compliance costs would climb by 13%. It suggests companies that house intellectual property in Ireland but manufacture elsewhere would pay more.

E&Y’s head of tax Chris Sanger is quoted in the Financial Times saying the new plan would undermine the benefits of having a lower corporate tax rate.

 

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