Irish tax regime attacked

GERMANY’S finance minister has made a blistering attack on Ireland’s low corporate tax rate and accused the country of using EU money to fund unfair competition.

His outburst at the end of a EU Finance Ministers meeting in Luxembourg, which he chaired, was condemned by the business association IBEC as “disgraceful”.

Minister Peer Steinbruck is pushing an attempt to harmonise corporate tax bases across the EU, which is being strongly resisted by a number of countries, including Ireland.

He named the Dublin Docklands complex — the Financial Services Centre — and some Dutch incentives as examples of countries using low tax rates to attract industry and business and engaging in tax dumping.

Ireland had used money it received from the EU to fund its public services rather than raising it through normal tax systems, he said.

“It is unfair to reduce tax rates and get money from the EU to finance public spending. Ireland is offering tax rates very advantageous and organising the tax competition.

“This cannot continue unless you want to jeopardise the EU idea,” he said.

This was also the position of other net contributors to the EU budget as well as Germany. They do not want the problem of tax dumping to continue either, he said.

“Some countries are concerned about using certain techniques to fund their public finance requirement in the hope that if they do not have sufficient income it will be compensated by EU funds,” he said.

Ireland has the second-lowest corporate tax rate in the EU at 12.5% while most of the new member states have rates well below the average of the EU15.

Arthur Forbes from IBEC’s Brussels office said Mr Steinbruck’s attack on Ireland was disgraceful and unbecoming of a president in office of the Ecofin council.