EC Launches Consultation On Tax And Accounting Reforms

07 March 2003 The European Commission has invited comment on several proposals designed to assist European SMEs by reducing the tax compliance burden faced by smaller businesses.

Under the terms of the plans which have been put forward, small businesses trading throughout the EU would have the option of accounting for EU-wide profits with one tax declaration.

Several ways of achieving this single tax base have been put forward by the European Commission, including home state taxation, whereby, according to an EC statement 'a multinational group would be able to opt to calculate the taxable profits for all its EU operations according to the tax rules of the Member State where its headquarters are based'.

Another option put forward by the EC was the creation of a common, or consolidated tax base, whereby: 'a multinational group would be able to opt to calculate the taxable profits for all its EU operations according to a new common set of tax rules applicable across the EU'.

'These consultations aim to examine ways to tackle the tax obstacles hindering companies from benefiting fully from the Internal Market,' Internal Market and Taxation Commissioner, Frits Bolkestein explained.

Also up for debate, according to the EC, are proposals for the creation of an international accounting standard (IAS) which could serve as an EU-wide tax base for listed companies. The consultation periods for the tax and accounting reform documents end on March 31 and April 4 respectively.