The Institute has responded to the public consultation on the re-launch of the Common Consolidated Corporate Tax Base (CCCTB) as a member of CCAB-I. Our response points out that the premise of the current consultation appears to be acceptance of the CCCTB as a coherent policy option. This is clearly not the case, nor has it been the case at any stage in the past 15 years since the CCCTB idea was first mooted.

Our response reflects the reasons why CCAB-I are not supportive of the CCCTB.

Overall, the concern of CCAB-I is that CCCTB ignores the principle of sovereignty. Adopting a CCCTB would effectively take control of direct tax policy away from governments. The CCCTB proposals in their current format are inflexible and could not be changed quickly enough to respond to economic conditions or implement country specific amendments to address areas of economic difficulty.

There would essentially be a two-tier tax system in EU countries; one for those subject to CCCTB and one for those outside it. This would be both administratively complex, costly and very difficult to manage. CCCTB’s premise is to prevent member states using preferential regimes to erode the tax base of other countries.

However, what it would not do is prevent states competing on tax rates so as to attract real economic activity. CCCTB may even increase such competition. The effective tax cost of doing business in a particular country would be much more transparent as there would be one single base to which the rate is applied.

Our response is published on the Chartered Accountants Ireland website www.charteredaccountants.ie