Pierre Moscovici pitches tax plan in Ireland

Pierre Moscovici, head of tax at the European Commission, was in Dublin yesterday and said he was open to compromises that would help encourage Ireland to buy into Brussels’ new tax proposal that aims to share out Europe’s corporate tax spoils.

But based on questioning he faced from TDs and from comments made in a speech by Finance Minister Michael Noonan, Mr Moscovici’s central message that no one here should feel threatened by the commission’s latest tax plan failed to play out well.

In the job for just two years, Mr Moscovici was appointed by the head of the commission, Jean-Claude Juncker, to relaunch “a new and improved” version of a proposal for the EU to collect and distribute tax — the Common Consolidated Corporate Tax Base (CCCTB) — which has been long loved by some of the largest EU countries.

For over a decade, the Irish authorities have shown disdain for any CCCTB proposal. An earlier version ran into the sands during the financial crisis six years ago.

No surprise then that the commission’s new corporate tax initiative has raised new worries at a time when Ireland faces uncertainties as both the UK and US prepare to slash their tax rates.

The Government has, in the last four years, also been through something of an international tax wringer. It phased out the discredited ‘double Irish’ accounting wheeze and enthusiastically backed the international tax reforms led by the Organisation for Economic Co-operation Development.

Continuing to tax the profits of multinationals in their place of incorporation suited Ireland just fine.

Mr Moscovici said the new plan was nothing like the old one. The commission from the get-go was seeking compromise “in an open-minded” way.

Acknowledging Ireland was unusual in having effectively three tax rates for different types of corporate profits, he said the proposed common tax base didn’t threaten the main 12.5% corporation tax rate.

Moreover, he insisted that adopting CCCTB would promote “fairness” and boost economic growth across the EU even though Irish GDP would likely fall slightly under the plan. The benefits would include small firms gaining access to loans, he said.

It was still something of a hard sell. Speaking at an Irish Times and PwC tax conference, Mr Noonan said the Government would not dismiss the proposal outright.

But the general view, he said , was the country’s corporate tax base would contract under CCCTB and lead to hikes in personal taxes. It appears Mr Moscovici has his work cut out.