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CCCTB

The 12th meeting of the European Commission CCCTB Working Group took place on 12 December. This meeting was preceded by an Open meeting of business representatives and academics on 10 and 11 December. Mary O'Brien, ICAI Senior Taxation Manager, attended the open meeting. The following is an update from the meeting:

The open meeting dealt with the most recent working papers from the CCCTB Working Group:

  • – CCCTB: possible elements of a technical outline;
  • – CCCTB: possible elements of the administrative framework;
  • – CCCTB: possible elements of the sharing mechanism.

At this stage in the CCCTB proposal process, the question of whether to introduce CCCTB or not has been overtaken with various technical concerns in relation to each aspect of the CCCTB – technical; administrative and sharing.

In relation to the technical outline, the issue of whether to use a directive or regulation was discussed; disappointment was expressed that 27 national GAAPs would be used rather than International Accounting Standards; the use of two percentages (50% for inclusion in a group, and 75% for consolidation) was criticized.

In relation to the administrative framework, access to the central database was the key concern, in particular the interaction with the exchange of information article in the various bilateral treaties. Also, clarification was sought on the Commission's position on penalties and audits in the CCCTB.

The two key issues in relation to the sharing mechanism (i.e. formulary approach) related to whether to include sales by destination or sales by origin; and whether intangible assets should be included. Reference to business in the 21st century was mentioned; with profits being generated from clicks rather than bricks (only bricks are included in the formula). The formula was identified as a possible deal breaker, and the magic ingredients seem to be simplicity and stability, without manipulation.

Surprisingly, the principle of Comitology (a process by which key decisions in the area of Direct Tax will be delegated to the Commission); and optionality of the CCCTB did not warrant much discussion at the meeting.

The ICAI's position on the CCCTB is outlined in our position paper, which is included in this issue of tax.point.