The European Commission is preparing a corporate tax package, which plans to reform corporate taxation in the European Union.
The goal is to tackle tax avoidance, improve transparency, secure sustainable revenues and strengthen the single market for businesses. One of the key actions is to re-launch the Common Consolidated Corporate Tax Base (CCCTB) and a framework to ensure effective taxation where profits are generated.
Fortum has contributed to the topical EU discussion. In our view, it is important also to consider how taxation could be improved to drive competitiveness and growth of EU companies and the internal market. We strongly support the initiative for an EU-wide plan of action to improve the predictability of taxation and to avoid double taxation. Furthermore, we would like to see improved transparency of legislation and its interpretations by tax authorities. When preparing new legislation, sufficient impact assessments are needed, taking into account also sector specific aspects. Furthermore, we encourage the EU Commission to take an active role against discriminatory tax policies.
As one of the pioneers in tax reporting, we emphasise that public tax reporting should concentrate on principles and policies that can be audited. In our view, all companies should be invited to report their tax footprint - but the geographic reporting should focus on materially significant countries to keep the work load at a reasonable level, especially for smaller companies. In our experience, highly detailed reporting does not automatically lead to increased transparency, and the understanding of the total picture can get fragmented.
As regards to the CCCTB, it can bring added value to companies like Fortum only if it increases the neutrality of national tax authorities over national interests. It is evident that proposed new allocation principles will impact tax revenues received by some countries. This possible loss of revenue should not, however, be compensated by new taxes. We also call for a proper impact assessment to understand the impact of the proposal on different countries, and more broadly, on the EU internal market. We are concerned that small, export-dependent countries with capital-intensive industry, such as Finland and Sweden, can suffer from the initiative.
A clear, stable and predictable tax environment is a major driver for competitiveness and growth – both for companies and countries. In our experience, perhaps the most critical factor is international transparency in decision making and smooth processes by law makers as well as tax authorities. They reduce the need for lengthy disputes, but they can also secure the competitiveness of EU companies against non-EU companies.
Fortum's comments concerning competitiveness, corporate tax transparency and tax reporting