Noonan takes fight to France over corporate tax

FINANCE Minister Michael Noonan took the fight over corporation tax to France when he said its attempts to increase Ireland’s rate were perverse.

In a challenge to French President Nicolas Sarkozy, the minister revealed that the French rate of 34% was cut to a little more than 8% for most companies, thanks to generous allowances and opt-outs.

The Chartered Accountants Ireland warned that the debate was damaging the country as clients ask how long the country’s 12.5% tax rate would continue.

Ireland’s fight-back received support yesterday as Economics Commissioner Olli Rehn said changing the rate was not part of the EU/IMF loan conditions while the Italian finance minister, Giulio Tremonti, said it would not be wise to deprive the country of the tax rate which was used to attract investment.

Ireland will find itself with another battle on its hands today when proposals for an EU-wide tax assessment system are unveiled.

Meanwhile, Central Bank governor Patrick Honohan warned the bank stress tests will be much more aggressive than last year’s and will build in greater expectation of people being unable to pay their mortgages.

There are fears the banks will need more than the €35 billion set aside to recapitalise them and Mr Noonan has warned the burden of the banks’ needs together with those of the state could be too much for the country.