Chartered Accountants Ireland
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Chartered Accountants Ireland is Ireland’s leading professional accountancy body, representing over 38,400 members in over 100 countries and educating 6,600 students.
ID: 597774414194-08
Lobbying Activity
Response to Business in Europe: Framework for Income Taxation (BEFIT)
25 Jan 2023
Executive Summary CCAB-Is comments on the Business in Europe: Framework for Income Taxation (BEFIT) initiative are summarised below and discussed in detail in the next section of the consultation response: 1. The OECD Two-Pillar Solution is a landmark in international cooperation in taxation matters. This initiative has yet to be fully agreed, and until the rules are fully implemented and given time to mature, it is premature to consider a suite of measures which would apply to SMEs who predominantly operate within their national boundaries. 2. CCAB-I is in favour of a move toward a territorial system of taxation which would benefit SMEs and enhance intra-EU trade in a proportionate way consistent with the principles of subsidiarity and sovereignty. 3. CCAB-I considers that direct taxation should remain the responsibility of national legislators and this we believe to be consistent with the principles of sovereignty and subsidiarity. 4. The current BEFIT proposals suggest that dual tax systems would operate in EU countries, and it is questionable whether administrative efficiencies could be achieved from such dual system. 5. CCAB-Is view is to allow the Pillar One and Pillar Two processes to conclude before consideration of implementing a further set of complex rules, which clearly have some overlap. Discussion Harmonisation and co-ordination are at the heart of the European Union. The European Commission has argued in the past that a degree of harmonisation is necessary to enable the internal market to function effectively and efficiently . At the same time, national fiscal sovereignty has long been recognised under the Treaties by the requirement that decisions on tax harmonisation at European level must be taken by unanimity. The view of CCAB-I is that Member States continue to value fiscal autonomy while simultaneously recognising the value of cooperating to prevent harmful tax practices. This is evident from the support across the European Union for the Anti-Tax Avoidance Directive (ATAD) and more recently the ongoing support for the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting (BEPS). The former suite of measures is consistent with the principles of subsidiarity and proportionality given they seek to address issues arising from a mobile tax base. The OECDs Two-Pillar Solution to Address the Tax Challenges Arising from the Digitalisation of the Economy (the Two-Pillar Solution) , once implemented, will also be consistent with this principle as it seeks to address tax challenges in the digital economy by way of the proposed Pillar One and Pillar Two project. The Two-Pillar Solution is a landmark for international cooperation in the area of taxation. Pillar One of the Two-Pillar Solution sets out a suite of measures designed to allocate profits of multinational enterprises (MNEs) with turnover globally above 20 billion and profitability above 10 percent. Pillar Two consists of two interlocking domestic rules and a treaty-based rule which together aim to achieve a minimum effective tax rate of not less than 15 percent for MNEs with turnover globally above 750 million. The Irish Government recently consulted on the implementation of Pillar Two . In our response, we noted that the implementation of Pillar Two will require ongoing stakeholder engagement throughout the course of implementation of Pillar Two to enable stakeholders to adapt most efficiently to the new reporting regime and provide meaningful input throughout the implementation process. While the Two-Pillar Solution mentioned above is seeking to achieve certain minimum standards regarding tax base and tax rates, the principle of proportionality appears to be preserved in that the measures will apply to companies with relatively significant levels of turnover and profitability. The BEFIT proposal mentions possible benefits to such harmonisation for small and medium enterprises (SMEs). It is not clear what immediate be
Read full responseMeeting with Mairead McGuinness (Commissioner) and
12 Mar 2021 · Opening address of their Annual Conference