Ireland ‘will not participate’ in any attempt for EU-wide corporation tax rate

Finance Minister Paschal Donohoe has warned the European colleagues Ireland "will not participate" in any EU attempt to alter our coveted corporate tax rate, writes Fiachra Ó Cionnaith.

Speaking before a high-level meeting of European finance ministers in Tallinn, Estonia, on Friday, Mr Donohoe said Government will resist fresh attacks on the Irish tax level.

In a state of the union address on Wednesday, European Commissioner president Jean-Claude Juncker said he and other senior officials are seeking to agree an EU-wide corporate tax rate.

The move, which was described by the Irish Fiscal Advisory Council as posing a bigger financial threat to Ireland than Brexit due to the impact it could have on companies like Apple and Facebook which are based here.

The potential tax "harmonisation" has been repeatedly sought by larger EU nations like France and Germany in recent years due to the fact it would make it more attractive for multi-nationals to base themselves in their own countries instead of Ireland.

However, speaking on RTE Radio's Today With Sean O'Rourke programme on Thursday at the start of the Fine Gael pre-Dáil think-in in Clonmel, Co Tipperary, and before travelling to Estonia, Mr Donohoe warned Ireland will refuse to take part in any discussion on potential changes.

"Our stance on corporation tax of 12.5% and the development of things like a knowledge box and how we manage patents is an entirely legitimate and entirely sustainable policy choice for small open economies like Ireland to take.

"Other countries make choices on how they create, retain and attract jobs into their country and we're doing exactly the same. And I won't participate in any policy agenda that changes that for Ireland," Mr Donohoe warned.

"I believe the European Union is the vehicle to help our country realise more political and economic progress, but inside that our national interest in key issues will continue to be protected by myself and my Taoiseach.

"That is actually a challenge for many many countries. But, yes, including our own.

"Many countries including Ireland will have very clear and strong views in relation to it. Let me be very clear and be very explicit about this, I and this Government will not participate in any decision that changes our ability to protect our national interest on key issues like that.

"The need for unanimity, for all countries to agree to a change, is a core issues of how the European Union manages issues like this. It is a process I have seen used many times. and I won't change that and I know we will be joined by many countries that will have the same view," he said.

Asked about Mr Coffey's Irish Fiscal Advisory Council concerns that a possible corporate tax rate change could have a more damaging impact on Ireland than Brexit, Mr Donohoe added:

"I couldn't go as far as that. I believe Mr Coffey was very, very fair in the context of if this were to materialise over a number of years it would be a very, very big economic challenge for Ireland.

"Brexit is far more likely to materialise than the threat you are questioning me on. Yes, it [a corporate tax rate change] is a big threat that is out there, but this government will continue to hold [our position]."

While the vast majority of EU member states would be in favour of corporate tax rate harmonisation, Ireland can veto such a move as it must be unanimous among the 27 member states.

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