At its sitting on 11 of May 2011, the Committee on European Affairs and Oversight of the European Funds (CEAOEF) reviewed the proposal for a Council Directive introducing a Common Consolidated Corporate Tax Base (CCCTB) СОМ (2011) 121 of 16 of March 2011. The Directive is listed as Article 28 on the Annual Working Agenda of the National Assembly for 2011.
The proposal for a CCCTB establishes a single set of common rules pertaining to computing the tax bases of associated enterprises which are tax-resident in the EU. Under the CCCTB, groups of companies would have the chance to calculate a common tax base and file a single tax return in the Member State in which the parent company of the group (‘principal taxpayer’) is resident for tax purposes. The common tax base shall be shared between the group members on the basis of a formula for apportionment. Thus, a certain part of the base for each company shall be determined by the Member-State where the firm carries its activity. The proposal introduces a new administrative framework within which the group of associated enterprises operating on the territory of various Member-States will be subject to management and control for the purposes of the corporative tax only by the competent authorities of one Member-State that will also have the power to solve any legal disputes that ensue.
In accordance with the rights granted to the Member States by the Treaty of Lisbon, national parliaments have the chance to actively participate in the EU decision-making process by raising objections to certain European legislative proposals when the latter are not compliant with the subsidiarity principle. In relation to the Council Directive on a Common Consolidated Corporate Tax Base, CEAOEF deems that the proposal is in breach with this principle. The Committee supports the Commission’s initiative to harmonize the common corporate tax rules but concludes that the European Commission has not presented sufficient qualitative and quantitative data to prove that the objectives of the proposed action can be achieved more efficiently at the EU level. CEAOEF finds that the introduction of a common consolidated corporate tax base unable to reflect the production structure specifics of each Member State would deprive the Union as well as its separate countries, of important competitive advantages, and would exacerbate the “scissor effect” between Member States. In this sense, this measure could hinder the further integration of the Single Market. Given the abovementioned concerns, CEAOEF rejects the proposal under the principle of subsidiarity, and reiterates its position on the Bulgarian fiscal policy, according to which the latter should be approached carefully so as to eliminate the risk of a negative effect on the stability, predictability and competitiveness of the business environment.
Furthermore, CEAOEF finds that the proposal generates additional administrative and financial costs for the Member States and thus exceeds what is necessary to achieve the objectives of the Treaties. The implementation of the Directive would lead to the introduction of a new legal framework as well to a substantial overhaul in the rules governing the taxation of corporate incomes and profits regardless of whether companies belong to European groups. In addition, the enforcement of the measure would require the adoption of concepts from the international taxation laws that are currently not used in Bulgaria, which would represent an additional burden for the business and the administration. In this sense, the proposal for a Directive could negatively affect the national budget while the precautionary clause would not be able to compensate the unjustified cut in corporate activity. Moreover, the Directive is likely to have a negative impact on investments in Bulgaria and some other Member-States, which indicates that it is not the most proportionate solution to the problem presently observed within the Union. Taking those concerns into consideration, CEAOEF deems that the proposal is not compliant with the proportionality principle.
The proposed Directive was also reviewed by the Budget and Finance Committee which also expressed reservations regarding its provisions. After serious discussions in the relevant parliamentary committees, the Bulgarian National Assembly’s Reasoned Opinion was sent to the European Commission, the European Parliament and the Council Presidents within the determined 8-week period. It is expected that it will be taken into consideration in the further discussion of the Directive. Up to date, the latter has aroused opposition in a substantial number of Member-States, leading many to hope that the voice of the national parliaments will be heard and respected / heeded.
This is the first Reasoned Opinion in relation to the subsidiarity checks that the Bulgarian national Parliament can carry out on the European legislative proposals. It was issued by the Bulgarian National Assembly via CEAOEF in compliance with the procedures stipulated in the Lisbon Treaty. It follows the Committee’s stated position on the package of six EC legislative proposals on the topic of the EU’s New Economic Governance, and demonstrates the increasingly active role of the Bulgarian National Assembly to keep the national interests secured.
CEAOEF’s issued Reasoned Opinions on the European draft acts, included in the Annual Working Agenda of the National Assembly on the issues of the EU for 2011, can be found at: http://parliament.bg/en/grp2011