WRITTEN QUESTION No. 1098/96 by Jesús CABEZÓN ALONSO to the Commission. Tax arrangements for SMEs
Date: 1996-05-13
Institutions: CABEZON ALONSO, European Parliament
Subjects: administrative formalities, capital transfer tax, economic stabilisation, fiscal policy, free competition, investment aid, national law, small and medium-sized enterprises, tax system, transfer of businesses













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91996E1098

WRITTEN QUESTION No. 1098/96 by Jesús CABEZÓN ALONSO to the Commission. Tax arrangements for SMEs  


Official Journal C 280 , 25/09/1996 P. 0116 





WRITTEN QUESTION E-1098/96 by Jesús Cabezón Alonso (PSE) to the Commission (13 May 1996)Subject: Tax arrangements for SMEsWith a view to promoting investment in SMEs in the European Union, what initiatives will the Commission take to recommend a less complex tax system for such undertakings and introduce mechanisms which will prevent tax discrimination, which might distort free competition in the setting-up of small and medium-sized undertakings?Answer given by Mr Papoutsis on behalf of the Commission (18 June 1996)In its communication of 25 May 1994 on the improvement of the tax environment of small and medium sized enterprises (SMEs) ((COM(94)206. )), the Commission stated that, in accordance with the principle of subsidiarity, the problems faced by SMEs concerning their capacity to attract sufficient financial resources and their inability to cope with administrative complexity need to be addressed at national level.However, the Commission has made recommendations to Member States to encourage specific improvements in the tax environment of SMEs. The recommendation concerning the taxation of SMEs ((OJ L 177, 9.7.1994. )) invited Member States to adopt tax measures needed to correct dissuasive effects of progressive income tax on the reinvested profits of unincorporated enterprises and to eliminate tax obstacles to changes in the legal form of enterprises. The recommendation on the transfer of SMEs ((OJ L 385, 31.12.1994. )) included an invitation to Member States to reduce the burden of taxation on the transfer of businesses, especially inheritance and gift tax, with the aim of ensuring that their taxation policy is better adapted to ensuring the survival of businesses.Furthermore, the Commission asked the Member States to encourage, through appropriate fiscal measures, the reinvestment of the proceeds from the sale of an enterprise into another enterprise, and hence to encourage the continuity of the enterprise when its ownership changes.In its report on SMEs ((CSE(95)2087. )) to the Madrid European Council, the Commission recommended that Member States should develop a bold strategy of administrative and regulatory simplification in favour of SMEs, including a simplified VAT system. Furthermore, the Commission called for a convincing initiative on the part of Member States in order to make equity financing for SMEs more attractive than debt financing, thereby improving their financial stability and their survival rate under difficult economic conditions.Finally, the Commission underlines the importance of taking forward the work on taxation set out in the document on taxation in the European Union ((SEC(96)487. )) discussed by economic and finance ministers at Verona. The document proposes a new global approach to taxation and social security issues which takes into account the objectives of the single market, economic and monetary union and the fight against unemployment.