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ACCA also commends the strong emphasis of the Green Paper on a wider range of financing options for small and medium size entities (SMEs)’s, such as listing on a growth market, or attracting equity investment from outside their home countries.
ACCA acknowledges that building a CMU is a long-term project that needs to be envisaged under several different - though interlinked - angles. The Green Paper indeed addresses a vast range of issues. Many of them - such as standardisation of accounting standards and credit information for SMEs; the so-called 'prospectus Directive'; enabling alternative means of financing via securitization or crowd-funding; long term investment; different national tax treatments and insolvency regimes; corporate governance, etc - are close to ACCA’s heart.
Richard Martin, head of Corporate Reporting at ACCA says:
"ACCA supported the endorsement of IFRS for groups traded on regulated markets in the EU, so it is logical that we would support, for perhaps smaller EU entities dealt with on other trading venues, a common set of standards, especially if this is based on international principles. There are, however, likely to be practical difficulties in achieving this common set for the CMU, as evidenced by the number of Member State Options in the recently revised Accounting Directive, and the continuing legal and economic differences between Member States.
There is also a tension between the desire to mitigate the regulatory burdens on smaller entities, and the aim of ensuring that financial statements contain all of the information needed by key user groups."
Regarding the taxation aspects covered by the Green Paper, Chas Roy-Chowdhury, head of Taxation at ACCA says:
"ACCA welcomes the fact that the European Commission is considering addressing the issue of divergent tax treatments, as this may be an impediment to the smooth functioning of capital markets. We certainly consider that withholding tax for cross-EU dividend payments should be reduced to zero, as there cannot be a justification to such a tax in a single market. The ultimate destination country should be entitled to decide and levy the appropriate level of tax.
In addition, we agree that the relief for interest, but not for equity, is a hindrance to increasing equity financing and capital formation rather than debt funding. But we consider that any equity tax relief should be in addition to debt relief and not instead of."