The document provides information about the euro currency and the European monetary union in 3 paragraphs: 1) The euro is the official currency of the European Union and is used by 19 of its member states. It was introduced in 1999 and adopted in 2002 to increase economic integration and stability across the EU. 2) The Maastricht Treaty led to the creation of the euro and outlined convergence criteria for EU members to qualify for the eurozone. The European Central Bank was established to implement monetary policy for the eurozone. 3) Implementing the euro involved complex financial and economic changes across many markets and sectors. Member states transitioned from national currencies to the euro at different speeds, while ensuring contracts and obligations were

1. EURO CURRENCY

2. PRESENTATED BY : SOUMITA PATRA 67 DIPTAKSHYA BANARJREE 76 AVIJIT BHATTACHARYYA 91 SOUMALYA SEN 120 SREEJI S NAIR 100

4. Eleven member states have adopted it collectively known as Eurozone.(Austria, Belgium, Cyprus, Finland, France, Germany, Greece, Ireland, Italy, etc.)

5. Taking official estimates of 2007 GDP, the Eurozone is the 2nd largest economy in the world.

6. The euro was introduced to world financial markets as an currency in 1999 and launched coin and Banknote on 1st, January 2002.

7. All nations that have joined the EU since the 1993 implementation of the Maastricht Treaty

8. The euro sign (€) is the currency sign used for the euro the official currency of the European Union(EU).

9. The design was presented to the public by the European Commission on 12th December , 1996.

11. Signed on 7 February 1992 between members of European community

13. Eleven countries have been selected as the members of EMU. As part of the EMU, these eleven countries now make up the world's second-largest economy, after the United States

14. Greece and Sweden, failed to meet the convergence requirements in time to join the EMU in the first round. Sweden failed to satisfy two of the conditions:

16. It encouraged cooperation between the national banks of the member states of the EU

17. Further budget constraints are required in countries ( Italy and Belgium) meet the requirements of the pact.

19. Annual government deficit: the ratio of the annual government deficit to gross domestic product (GDP) must not exceed 3%

20. Government debt: the ratio of gross government debt to GDP must not exceed 60% at the end of the preceding financial year.

23. Expected their customers and suppliers to use Euros in transactions

24. Internationally oriented medium sized companies will probably also turn quickly to new currency in many of their functions

26. Possible to make non cash payments in Euro ex. tax

27. Companies were particularly concerned to pay income and corporation tax returns in DEM until 2001

31. Established principle that who wants to use the euro can but no one can be forced to

32. Determines the legal status of euro vs. the national currencies

33. Euro EG opened company,stock exchange,accounting&currency law to the Euro

34. Paved way for changeover on the financial markets & exchangesthat lead companies to adjust their accounts,equity capital structures

37. New exchange rate mechanism (ERM II) is set up to provide stability between the euro and the national currencies of countries that haven't yet entered the eurozone

38. The 11 initial countries that will participate in the third stage from 1 january 1999 are selected.

40. ECB FUNCTIONING MECHANISM ECB working procedures are segregated into three parts: 1. GOVERNMENTAL 2. EXECUTIVE SECTION 3. GENERAL BODY

42. Implement the Monetary policy

45. Minimum reserve are seen as a means to create a structural liquidity shortage thus strengthening the role of the ECB as a supplier of liquidity.

53. Appropriate yield premium

54. Existence of highly developed future market

55. Issue of trading bonds and coupons separately

57. Public Sector issuers

58. Supranational institutions and foreign issuers

60. There is no difficulties for European investors

63. Japan is leading country

66. Products become more standardized and transparent

67. Liquid and trading volume increase and costs will fall

70. Greater Role in International Currency System

71. Doesn’t Affect Purchasing Power

72. No Bail-Out of Member States

73. Boost Growth & Employment in the Long Term

74. Easier Travel & Money Transfer in EU

75. Companies to Benefit in Multiple Ways

77. Euro v/s USD

80. Programme for harmonization of Direct taxes(1967)

81. Van den Tempel Report (1972)

82. Proposal for a Directive to harmonize Corporation Tax (1975)

83. Ruding Report (1992)

85. ROADS TO REFORM Evaluations of any proposal on the harmonization of corporate income tax or its assessment base will differ depending on the objectives of taxation reform and on what it is supposed to deliver. The objective of tax neutrality i.e., efficient and incentive-neutral taxation, is a general requirement of any regime. Investment decisions should not be distorted. And it is equally important to avoid double taxation or no taxation of incomes. Indirectly linked to this is the aim to ideally simple and transparent taxation. This should involve the minimum possible compliance costs for companies and the minimum possible administrative costs for the tax authorities. Moreover, in order to determine the basis of taxation for the Member States involved, intra-group transactions within the corporate groups have to be simulated by means of transfer pricing systems. It is also necessary to secure to the states, appropriate share of the tax base and guarantee them tax revenues. For each State uses the part of its tax receipts to provide public goods that companies also use.

86. Theoretical Solution TO THE PROBLEM ? Source Principle: When a State levies taxes only on income obtained within its jurisdiction, it is the Source Principle Residence Principle: When a State taxes the worldwide income of a taxpayer resident within its jurisdiction, we use the term Residence Principle. Consistent implementation of the residence principle combined with the imputation of subsidiaries’ income to the parent company would theoretically be a possible alternative to CCCTB.This option would retain the separate calculation of profits , and differences in the tax rates would not give rise to distortions in Investment decisions.

87. Common consolidated corporate tax base (ccctb)The COMMON CONSOLIDATED CORPORATE TAX BASE (CCCTB) Basic Concept: It is a proposal comprises creation of a uniform EU-wide tax base permitting the consolidation of profits and losses. So far the European Commission envisages offering companies the CCCTB as an additional option, enabling them to choose between the previous national system and the new regime. The total profit calculated this way would then have to be allocated by means of an apportionment system.(i.e., with reference to certain key variables)to the Member States were the corporation is active.

88. STARTING EFFECTS OF CCCTB 1.The European Commission plans to submit a proposal by the end of 2008 on harmonizing the corporate income tax base. Helps the multi jurisdictional corporations as they can apply it as an alternative Taxpaying scheme. 2. The Companies could potentially cut their tax compliance ( as per certain accepted standards) cost. 3. CCCTB involves a considerable curtailment of the Member States Tax autonomy (independence). - This requires unanimity among the member states 4. The CCCTB concept is not a self-contained approach; rather, it allows various methodological designs. 5. The CCCTB requires an allocation mechanism with which to ‘share out’ an enterprise’s consolidated tax base among Member States. 6. An apportionment formula involves incentive effects for both companies and Member States. 7. It safeguards the principles of taxation at source.

89. ALLOCATION MECHANISM:THE MOST TRICKIEST PORTION The European Union wants to fairly divide the tax base among the Member States. It is necessary to apportion the tax base because companies operating under a CCCTB regime combine the profits of all their subsidiaries. Since this will enable full offsetting of profits and losses, all else being equal, overall tax revenues are likely to fall. VARIOUS ALLOCATION APPROACHES: Benefit Factor Formula- Profits should be allocated to relative use of public services provided by the State Factor Location Formula- Apportionment of Profits should be based on the where Physical Factors of Production are located. Source of Profits Formula- Apportion Profits based on where the economic activities has taken place.

90. MACRO- VERUS- MICRO FACTORS MACRO FACTORS- CONSUMPTION & GROSS DOMESTIC PRODUCT MICRO FACTORS- CAPITAL, PAYROLL & TURNOVER/ SALES Both alternatives have their advantages and drawbacks. The European Commission gives preference to an apportionment formula based on MICRO-FACTORS following the UNITED STATES & CANADA as the role models for the Tax System.

91. LIMITATIONS OF CCCTB High Administrative costs for the Participating Countries- Have to administer two system in tandem. Third Country regulations impose heavier administrative burden- Parallel Use of Different System No incentive-neutral taxation Tax Competition intensifies Real impact on tax revenues are in vague Restriction on the Member States’ Autonomy

92. CONCLUSION : The concept for a CCCTB is a good idea, provided the Member States are prepared to accept the loss of their autonomy. The main problem is with the international taxation i.e. the equitable sharing of tax revenues among the Member States. Achieving a consensus between 27 Member Countries for the common tax base will be difficult Tax legislation is subject to constant changes and developments. Ideas for new products and innovative technologies creates a need to adjust taxation systems. Last but not the least, it is to be seen that how corporate income tax is integrated into Income tax in general

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