Report: EU mulling new corporation tax regime

The European Commission is believed to be preparing new rules on taxation of business profits for across Europe, it was reported today.

EU tax commissioner Algirdas Semeta intends to co-ordinate corporation tax polices across member states, the Irish Times reported.

The policy would not seek to harmonise corporation tax rates but to introduce a common formula for the calculation of tax on the profits of firms operating in more than one member state, the newspaper said.

The plan is likely to be closely watched by the Government with opposition expected to any move which could affect Ireland's favourable corporation tax rate.

However analysts said Ireland's 12.5% rate of corporation tax is not about to be challenged.

“The Commission proposals will focus on how much of a company’s income should be taxed, not at what rate of tax” said Brian Keegan of Chartered Accountants Ireland.

"These reports merely confirm expectations that the European Commission proposals for a Europe wide approach to taxing companies would be made.

“At a meeting we had in May of this year with the EU Commissioner Mr Semeta, he confirmed that he was not interested in harmonising tax rates, and described tax competition as a facet of the EU Internal Market” said Mr Keegan.