The House of Representatives has published its Motivated Opinion on the European Commission’s proposal on a basis for a Common Consolidated Corporate Tax Base (CCCTB), saying it would not reach the aim of removing important impediments to the expansion of the EU’s internal market, chiefly those related to the existence of 27 different national fiscal systems.

Parliament was of the opinion that the aims of such a directive could be reached more efficiently through national means.

The document was laid on the Table of the House on Tuesday by Acting Speaker Ċensu Galea.

In its conclusions, Parliament considered that the EU Treaty and the Treaty on the Functioning of the EU did not clearly give European institutions the power to adopt a directive that included a measure seeking to establish the proposed CCCTB for the determination of a basis for a corporate tax through consolidation and apportionment, and in such an extensive manner. Due to the categorical disposition regarding the principle of conferment in the new treaties, the Commission was duty-bound to show that any proposed measure would fall under the provisions of those treaties. It would be failing to do this if the measure amounted to the creation of a system that went beyond the limits of harmonisation of laws, besides impinging on fiscal sovereignty as a state’s essential functions.

In any case, Parliament went on, the exercise of any power agreed upon with the Union (if not exclusive) must satisfy the principle of subsidiarity, and in any case proportionality. To prove this, the Commission would have to show that action by member states individually or collectively would be unable to achieve the desired results, while action proposed at Union level could achieve this and better.

The Commission would also have to show that the measure was necessary to facilitate the establishment or functionality of the internal market while not departing from what was necessary to the achievement of the objective. The proposed directive should not do more than was necessary to remove clear obstacles. It should be necessary and proportionate to achieve the desired result.

Besides, in the presentation of its proposal, the Commission must justify in detail how the proposal would fully respect these principles, and show how clear benefits would be greater than any negative effects.

The House of Representatives felt this had not been done in the proposal. No sufficient qualitative or quantitative justifications had been presented. There was no such justification, but a measure of considerable speculation.

Malta’s Parliament decided to object to the proposal because of the impact on state sovereignty and the anticipated serious consequences of the measure as presented, particularly for those economies that depended on services that had been in effect for decades. Any benefits, both for various member states and for the Union itself, were inexistent when compared to the damages that could be inflicted, or at best were speculative and dubious.