ALTHOUGH THE European Commission's efforts to introduce some sort of tax harmonisation in Europe was a feature in the Lisbon Treaty debate, only 6 per cent of chief executives believe that the business community is sufficiently up to speed on the issue, according to the PwC survey.
Tax harmonisation has long been on the commission's agenda, but under Commissioner Laszlo Kovacs, its strategy has focused on introducing a common consolidated corporate tax base (CCCTB).
The CCCTB aims to reduce cross-border tax obstacles and tax compliance costs by introducing a standardised methodology for the calculation and allocation of pan-European profits for tax purposes across the European member states.
Ireland, along with the UK and many of the eastern European accession states, has repeatedly expressed its disapproval of the scheme and can use its veto to vote against the CCCTB.
With one of the lowest corporation tax rates in Europe at 12.5 per cent, Ireland's competitive position would suffer from harmonisation, and the Government is fighting against the proposals on the basis of national sovereignty and subsidiarity.
However, while Ireland may never be obliged to comply with the CCCTB, Irish-based companies with pan-European operations may have to, as Mr Kovacs is still keen to introduce some form of tax harmonisation, and plans to do so even if it is only among a few countries.
In the autumn, he is due to publish a formal proposal on the issue, and has the firm support of France, which will take on the presidency of the European Union for six months from July.
French finance minister Christine Lagarde recently remarked that the CCCTB was an idea the French "are determined to push".
So, given the potentially significant impact of CCCTB on Irish businesses, the fact that 66 per cent of chief executives surveyed are unsure of the impact of the CCCTB on their own business means there is a knowledge gap which needs to be filled.
"This is a serious concern, given that the CCCTB proposals have the potential to have a very serious and negative impact on the tax strategies of businesses with operations both in Ireland and elsewhere in the EU.
"Business needs to understand how the CCCTB proposals might impact on their position, and to participate in the debate as to the merits or otherwise of the proposals on that basis," said Colm Kelly, senior tax partner with PwC.
FIONA REDDAN
