The European Commission proposal for a 3% ‘call rate’ as a new suggestion for a EUCIT: an assessment against the criteria for a fair taxation

Abstract:

The European Commission’s proposal for a 3% ‘call rate’ on the Common Consolidated Corporate Tax Base (CCCTB), to be introduced after the CCCTB itself, has been submitted with the draft budget for 2021–2027 for allowing the EU to rely on a new ‘own resource’.

This proposal would lead to a situation where uniform rules on the tax base at EU level would be accompanied by a uniform (however minimal) tax rate at EU level. Accordingly, without mentioning the ‘European Union Company Income Tax’ (EUCIT) suggestion which was initially put forward as one of the alternatives for a comprehensive business taxation scheme, the proposal for a 3% call rate can be considered as a step forward towards the EUCIT itself.

If the 3% call rate proposal were assessed against the classical canons for ‘fair taxation’ – equity, neutrality, certainty, convenience – it could be argued that the proposal manages to a good extent to meet the equity and the certainty criteria but could still be improved to better meet the neutrality and convenience criteria too, to the benefit both of its ability to result in a new ‘own resource’ for the EU budget and of the management of the CCCTB scheme itself.