At the IFA Congress in Brussels last month, Commissioner Kovacs confirmed that a proposal for CCCTB which had been expected this autumn is delayed as the work is not yet complete: “I should like to take this opportunity to clarify that I would rather present a perfectly elaborated and well justified product at the appropriate time than present an incomplete one just to meet an artificial deadline”.

The Commissioner is still arguing the “advantages” of CCCTB:

1. It would first of all provide a common tax base. This would considerably reduce compliance costs because the calculation of the tax base would be possible in the same way in all the participating Member States.
2. It would do away with the need to determine arms length transfer prices for intra group transactions.
3. It would provide a consolidation mechanism to offset profits and losses of the same company in different Member States. Companies would no longer have to pay tax on some profits, while overall they are in fact making a loss.”

These arguments are questionable. The most current suggestions envisage the computation of taxable profits under domestic rules, with a subsequent set of CCCTB adjustments to arrive at the CCCTB base. This won't reduce compliance costs. The “removal” of transfer pricing considerations under the CCCTB will not remove the need for pricing arrangements by virtue of legal and accounting rules. This implies revisions to accounting systems, more administration and no savings. And since the Marks and Spencer Group Relief case, EU Member States have been obliged to legislate for mechanisms to recognise losses incurred in other Member States.

The full speech is available at http://ec.europa.eu/taxation_customs/resources/documents/common/about/speeches/2008/
speech_kovacs_brussels_310808_en.pdf.