COMMUNITY LISBON PROGRAMME—COMMON
CONSOLIDATED CORPORATE TAX BASE (8231/06)
Letter from Rt Hon Dawn Primarolo MP,
Paymaster General, HM Treasury, to the Chairman
I am writing in response to your further letter
of 5 July 2006[4]
which was written in reply to mine of 16 June.
As you will recall from my letters to you and
to Jimmy Hood of 16 June and my earlier letter to you of 12 January,[5]
the Commission is taking forward its technical work in its Common
Consolidated Corporate Tax Base Working Group (CCCTB) WG) without
political commitments from Member States. The UK Government, as
you are aware, does not see a need for the Commission's technical
work in this area and remains clear that fair tax competition,
not tax harmonisation is the way forward for Europe.
The Government has no plans in the circumstances
to consult business on the technical work on a CCCTB which is
being conducted by the Commission.
The Committee might be interested to know however
that the Commission has designed the CCCTB WG's terms of reference
and rules of procedure to provide a voice for business and other
experts. Specifically, the terms of reference say: "The Commission
may decide to hold meetings in an extended formation of the WG
by inviting experts from business federations and associations
and academic institutions to contribute to the work of the WG."
Experts from business and others were represented at a one-day
extended meeting of the CCCTB WG on 7 December 2005 and at a half-day
session on 2 June.
The Commission's website on its work on a CCCTB
also explains that the Commission is keen to ensure contribution
by experts from business and from academics. An email address
is provided for those wishing to comment or contribute in response
to the CCCTB Working Group's documents.
On the issue of whether a common base should
be optional or compulsory for companies, there appears to be a
range of views, just as there are on other issues relating to
this work including the common tax base concept as a whole. From
discussions with others, however, it is fair to say that Member
States' national tax authorities and the Commission are generally
well aware that there might be potential issues and difficulties
for a Member State participating in a CCCTB which was optional
for companies. You may recall that in COM (2006) 157 the Commission
acknowledges that "care will be needed to ensure that State
Aid rules are not infringed and that appropriate anti-abuse rules
are introduced."
The Government will of course continue to keep
the Committee informed about future developments on the Commission's
technical work in this area, including any relating to the issue
of national tax incentives.
I hope you find this information helpful.
17 October 2006
Letter from the Chairman to Rt Hon Dawn
Primarolo MP
Thank you very much for your letter dated 17
October on EM 8231/06. This was considered by Sub-Committee A
at their meeting on 31 October when it was decided to hold the
document under scrutiny.
The Committee was interested to hear of the
Terms of Reference of the Common Consolidated Corporate Tax Base
Working Group. The Committee of course recognises the Government's
view that "fair tax competition, not tax harmonisation, is
no way forward for Europe", and supports this view in respect
of tax rates. However, the Committee notes that some in business
believe that a degree of harmonisation of structures could improve
both efficiency and transparency, and so make competition fairer.
Could you please confirm what role the Government are playing
in the Working Group to influence the debate on this subject?
Could you also confirm what the likely timetable is for the rest
of the Working Group's activities?
We would also like to be kept informed of any
other developments in this area.
31 October 2006
Letter from Rt Hon Dawn Primarolo MP to
the Chairman
I am writing in response to your further follow-up
letter of 31 October.
As far as UK participation in the Commission's
Working Group is concerned, including the role played to influence
the debate on this subject, I would like to draw your attention
to the second page and the first part of the third of my letters
of 16 June 2006 to Mr Jimmy Hood which set out in some detail
the basis of UK engagement in the Working Group. For instance,
you will see that the letter explains why the Government believes
that it is only right and proper that UK officials should be present
in discussions such as these in the EU and that this provides
the UK "with a further opportunity to engage with other Member
States and highlight the need for a change in approach".
The UK has, of course, participated fully in high level group
discussions on a CCCTB organised by a presidency, and will continue
to do so.
As regards the likely timetable for the rest
of the activities of the Commission's Working Group, I would like
to draw your attention to paragraph 8 of EM 8231/06 and Annex
1 of the Commission's Communication COM(2006) 157. The Commission's
website on its technical work on a CCCTB includes information
on the Commission Working Group's quarterly meetings including
the two most recent meetings which were held in June and September
2006.
The Government will of course continue to keep
both the Lords and the Commons Committees informed about developments
in this area. You may be interested to know that the European
Commission is expected to give an oral report on its progress
on its technical work in this area to the forthcoming meeting
of the ECOFIN Council on 28 November.
I hope you find this information helpful.
17 November 2006
4 Correspondence with Ministers, 40th Report of Session
2006-07, HL Paper 187, p 10 Back
5
Correspondence with Ministers, 40th Report of Session 2006-07,
HL Paper 187, p 12-13 Back
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