Conclusions and Recommendations of the Committee of Independent Experts on Company Taxation [commonly called the Ruding Report]

Abstract

The Committee will evaluate first and foremost the importance of taxation for business decisions with respect to the location of investment and the international allocation of profits between enterprises.An assessment of the impact of taxation relative to other factors on such decisions is necessary in order to determine whether existing differences in corporate taxation and the burden of business taxes among member countries lead to major distortions affecting the functioning of the internal market.If such distortions do arise, it is essential to examine all possible remedial measures taking into account the influence that other policies (e.g. economic and monetary union) might have on the extent of the tax-induced distortions.In order to determine the most appropriate action at the Community level, it is necessary to distinguish clearly between the main elements of the corporate tax system , namely the type of tax system, the tax base, and the statutory tax rate.Moreover , since some businesses are not subject to corporation taxes as a consequence of their legal status, the question also arises as to what action is required concerning non-corporate income taxes.In this regard, it is essential to define the priorities among the different measures that the Committee envisages, preferably with proposed dates for their implementation.The Committee will also have to give its opinion on the legal nature of any envisaged measure in order to determine whether the objective is to harmonize certain aspects or to limit it to the establishment of a framework for national tax legislation.Finally, the Committee should consider the demands placed on the tax system by other political objectives , such as those pertaining to the environment , health and social affairs, to address the question of how and to what extent it will still be possible to take into account non~tax considerations.