The Common Consolidated Corporate Tax Base and the UK Tax System
Christiana HJI Panayi
Queen Mary University of London, School of Law
April 14, 2011
THE INSTITUTE FOR FISCAL STUDIES TLRC Discussion Paper No. 9
This paper examines the European Commission’s draft plans to introduce a Common Consolidated Corporate Tax Base (CCCTB) for EU group companies. It analyses the basic features of the draft proposal, as published in the draft Directive of 16 March 2011 and the possible effects of these on the UK tax system. The paper focuses on areas such as formulary apportionment, loss relief, intra-group transfers, reorganisations, the administration of the new system, taxation of inbound and outbound investment and anti-abuse rules. Throughout this paper, there is a comparison of the proposed rules with the UK provisions.
Even though the Commission does not, for political reasons, acknowledge the possibility of Member States abstaining from the CCCTB, it is very likely that unanimity will not be reached in Council and any proposal will have to proceed via enhanced co-operation. The paper examines the application of enhanced co-operation in this context and considers how the rules of the CCCTB will be modified vis-à-vis non-CCCTB Member States. The paper also considers how non-CCCTB Member States such as the UK will be affected especially by the CCCTB anti-abuse provisions and the rules on the taxation of inbound and outbound investment (as drafted and as potentially modified).
The paper concludes by questioning whether it would be desirable for the UK to adopt the CCCTB or whether it should opt out. The repercussions of each course of action are summarised.
Number of Pages in PDF File: 104
Date posted: April 19, 2011 ; Last revised: April 10, 2012