Ireland under fresh attack from EU on corporation tax

Finance Minister Paschal Donohoe

The government has sharply rejected a fresh attack by the European Commission (EC) to remove Ireland's ability to set its own 12.5% corporation tax rate.

A new proposal, published on Tuesday by the Commission seeks to remove national vetoes on matters relating to tax.

This was despite Brussels moved to delay the implementation of the most controversial elements of the proposal to 2025.

Finance Minister Paschal Donohoe was unequivocal in his rejection of the proposal.

“Taxation is a sovereign member state competence and decisions at [European] Council on tax matters require unanimity,” a spokeswoman for Mr Donohoe said on Tuesday.

“Ireland does not support any change being made on how tax issues are agreed at EU level.”

Ireland is not alone in its opposition as a number of other EU countries including Denmark and Sweden are expected to take a similar stance.

Fianna Fail's Michael McGrath said his party are completely opposed to any proposal which would see the situation change from the status quo.

“This is an issue we highlighted last week. The EU Commission is proposing that the requirement for unanimity around corporation tax policy within the union would be replaced with a system of qualified majority voting," he said.

It is not in Ireland's national interest that there would be any change in decision making on corporation tax. It would cost us jobs, investment and it would cost us much-valued corporation tax revenue.

The EU Commissioner for Economic and Financial Affairs, Taxation and Customs, Pierre Moscovici, formally unveiled his blueprint on Tuesday for a transition to qualified majority voting on EU taxation policy matters.

A former French Finance Minister, Mr Moscovici has long sought to break Ireland's ability to set its corporation tax rate at 12.5%

The proposal seeks to see member states moving “swiftly” to developing qualified majority voting decision-making when it comes to measures that improve cooperation in fighting tax fraud and evasion, as well as issues in which taxation supports other policy goals, including fighting climate change and improving public health.

The Commission then seeks the introduction by the end of 2025 of qualified majority voting for voting on major tax projects, such as the common consolidated corporate tax base (CCCTB) and new system for the taxation of the digital economy, which it says “are urgently needed to ensure fair and competitive taxation in the EU”.

An original draft of the Commission’s proposal had a more ambitious timeline for the second phase – the end of 2020 – according to reports.

A Commission proposal last March for the introduction of a digital tax – levied at the rate of 3 per cent on EU-based digital sales of multinational companies – has been blocked by opposition from Ireland, Sweden and Denmark.

France and Germany were the main proponents of the measure.

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