IRELAND’S tax rate is not under threat, according to the Finance Minister Brian Lenihan, Enterprise, Trade and Innovation Minister Batt O’Keeffe and the Chartered Accounts of Ireland.
This follows news the European Commission is preparing plans on the way corporation tax is calculated in the European Union.
Mr Lenihan said there were no plans to set a European corporation tax rate while Mr O’Keeffe said there is a legal guarantee from the EU that Ireland sets its own corporation tax rate.
With a corporation tax rate of 12.5%, Ireland has one of the most attractive rates in Europe.
Tax director with Chartered Accountants of Ireland, Brian Keegan, said the commission’s report will not force countries to introduce the same rate of corporation tax but would introduce a common formula on how to calculate the tax on the profits of multinational companies. Mr Keegan said at a meeting in May with the EU tax commissioner Algirdas Semeta, he confirmed he was not interested in harmonising tax rates.
Mr Lenihan is due to meet taxation commissioner Mr Semeta on 20 September to discuss the issue.
However employers group, IBEC said it is “resolutely opposed” to the introduction of a Common Consolidated Corporate Tax Base (CCCTB) in the EU.
IBEC director general Danny McCoy said: “This proposal would almost certainly lead to an increase in companies’ tax bills by transferring taxable profits to the regions with large populations.
“This would result in lower revenue from corporation profits in smaller countries, which could lead to other taxes being increased to offset this loss of revenue. It would effectively result in a transfer of resources from smaller countries to larger ones.”
President of the American Chamber of Commerce, Lionel Alexander said Ireland is not the only state opposed to the introduction of new tax rules.
“Low-tax jurisdictions have been successful in stimulating economic activity and this should be encouraged. We fail to see how CCCTB would lead to improved competition in the internal market,” he said.
Commissioner Semeta is expected to publish the proposals early next year.
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