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Position paper - Business in Europe: Framework for Income Taxation (BEFIT)
The American Chamber of Commerce to the EU (AmCham EU) has consistently supported measures to strengthen the Single Market, including administrative simplification, greater incentives for innovative activity and better dispute resolution, in conjunction with the elimination of opportunities for aggressive tax planning. We have raised concerns in the past on the Common Consolidated Corporate Tax Base (CCCTB) (and Common Corporate Tax Base (CCTB)) and will repeat some of those which are equally applicable on the BEFIT project.
The first key goal of BEFIT is simplification. Any BEFIT type of project should be developed while considering their potential impact on growth, business investment decisions and job creation in the EU. The rules should be designed to support the achievement of tax certainty for taxpayers and tax administrations and not be too complex or too onerous in compliance to discourage investment. Otherwise, the approach under consideration may lead to disincentives for investment in Europe. Departure from the use of the long-standing, globally recognised and well understood ‘arms-length standard’ in favour of a ‘to-be-determined’ formulary apportionment is likely to lead to controversy and double taxation and makes the proposal overly complex.
BEFIT is being considered at a time when the international tax system is undergoing significant change. Global initiatives have been agreed upon by the OECD‘s Inclusive Framework to change the international tax landscape and introduce minimum taxation for large companies in the EU. Further changes to the global tax rules should at least await the assessment of the effectiveness of Pillar 2 implementation. Contemplating additional changes of taxation rules, before Pillar 2 has gained some stability and proven administrability, could be destabilising the international tax environment