The European Commission will unveil a proposal for an EU-wide common consolidated corporate tax base after the summer recess, probably by September, European Taxation Commissioner Laszlo Kovacs said yesterday.
Malta and a number of other member states oppose such a proposal as they consider it a first step in the harmonisation of corporate taxation.
Speaking during a debate in Brussels organised by the Centre for European Policy Studies, Mr Kovacs said the next few months will be very important as the Commission will finalise its impact assessment study prior to any legislative initiative.
He said he was impressed by the results of a recent KPMG survey showing that 80 per cent of companies would be happy to have a harmonised tax base at EU level allowing corporate taxation to be calculated.
Asked to state his position in view of the fact that this directive will need the support of all 27 member states to become effective, Mr Kovacs said that if, within a reasonable lapse of time after the presentation of the legislative proposal, the EU member states see that unanimity is impossible, then they will resort to strengthened cooperation.
"But this is a solution that would be the second best scenario," he added.
The issue of a common corporate tax base has been on the Commission's agenda for the past few years but it has so far stopped short of putting forward a formal proposal in the face of opposition from countries like Malta, Ireland and Germany.
The Commission argues that a harmonised company tax base will save money for cross-border firms, as they would not then have to comply with several different tax regimes. The directive would replace the 27 different national systems in the EU and enable firms to use the same rules for calculating tax on all their EU-wide activities.
Malta argues that although the Commission is making it clear that it doesn't want a harmonised corporate tax but only the same rules, it is clear that one would lead to the other. Malta's position is that this would wipe out the advantages that it offers as a strong financial services centre.
Tax services are among the most important aspects that foreign companies consider when choosing where to register their companies and Malta argues that taxation should remain a primary element of competition.