Ambitious plans to create a common corporate tax base across Europe would increase companies' compliance costs by an average 13 percent, rather than reduce them as planned, according to a study by accountants Ernst & Young.
Germany and France are leading the charge to introduce what they argue would be a far simpler way for companies to calculate their tax bills. But some European Union member states that have used favorable tax rates to attract investment, notably Ireland, are against the idea.
The EU put its plan to create a common consolidated corporate tax base, or CCCTB, on hold in 2008 but the idea is back on the agenda. Spooked by the financial crisis in Greece, European Union leaders are looking for ways of fostering closer economic cooperation among member states.
Detailed proposals will not be available until next month, but the principle behind a CCCTB is that companies would have the option of complying with a single, pan-European tax regime, rather than the national codes of 27 different member states.
Companies that opt in would have their tax bills calculated centrally, with the money they pay apportioned to the member states in which they do business, depending on the scale of their operations in each one.
The scheme is supposed to ease the compliance burden on companies, but research by Ernst & Young, commissioned by the Irish Business and Employers Confederation, claims that CCCTB would actually drive up compliance costs by 13 per cent.