EC puts forward measures to harmonise EU tax system

A RANGE of measures to harmonise tax system elements throughout the European Union has been put forward by Taxation Commissioner Laszlo Kovacs.

They include a proposal to have a single tax base for corporate taxation so companies can compare the benefits offered by each member and make it easier for companies with outlets in a number of countries.

Ireland is among a group of six countries that objects to this but Commissioner Kovacs suggests that those in favour of harmonising their base could do so.

A spokesperson for Finance Minister Brian Cowan said Ireland has resisted this move and he expects they will continue to do so.

So far Ireland, Britain, the Czech Republic, Estonia and Slovakia - all countries with low corporate tax rates - object to any harmonising while France and Germany are pushing it.

Business organisations representing European small and medium-sized businesses are anxious to have a single tax base as it would be especially beneficial for cross-border companies.

Mr Kovacs said his proposals aim to reduce red tape and compliance costs to better achieve the Lisbon objectives of increasing employment and growth.

He said that over the next four years he will introduce these proposals:

* To modernise the Customs Code and promote a better use of information technology in the customs area;

* To allow companies use a single basis of assessment for corporate tax for all their EU-wide activities;

* To modernise VAT rules particularly the current VAT treatment of financial services to improve efficiency and reduce costs, and of public authorities to ensure a level playing field with the private sector;

* To combat tax fraud; on R&D tax incentives that will set out the key EU legal conditions, highlight existing best practices and, where appropriate, set out the political message.

“The right taxation and customs policies can contribute to raising the efficiency of EU economies and the competitiveness of EU companies.

“With globalisation and increasing cross-border activity, a community approach on some tax and customs issues would be of considerable benefit to business and trade,” he said.

He said the commission will press ahead with tax and customs actions already launched. These are to simplify VAT compliance obligations; change the place of taxation of services for VAT purposes to reduce compliance burdens and eliminate distortions; restructure passenger car tax system of member states and combat counterfeiting.