Corporate Group Taxation: The Slow Lane to New Policies in Canada and the EU

Abstract

This paper examines some of the policy options put forward in the course of the recent public consultation by the Canadian federal Department of Finance, and the proposal of the Commission of the European Union, for systems of corporate group taxation (CGT). Building on the recent articles addressing the Canadian situation and the responses to the Department of Finance (hereafter Finance) consultation, it seeks to expand that analysis to the policy choices adopted in the EU proposal. It may seem incongruous to compare the corporate tax system of a long-standing federal state, with almost complete harmonization of its sub-national tax bases already in place, to that of a somewhat shaky, not-yet-federal supranational system which has only the most necessary and rudimentary instruments of harmonization in place. However, in many ways the common consolidated corporate tax base (CCCTB or 3CTB) proposed for the EU can serve as the closest comparator to Canada’s federal system, as Canada considers the adoption of a formal, legislated CGT. There are both substantive and procedural similarities and differences which may help in identifying model systems for each.