France to push for EU corporate tax harmonisation

IRISH government hopes of fighting off EU attempts to introduce a harmonised method for companies to calculate their tax was dealt a severe blow yesterday when France said it intends to push it during their presidency of the union.

Ireland fears such a move will result in the State losing tax it collects from multi-nationals and others that use the country because of its 12.5% tax rate.

French Economics Minister Christine Lagarde, at a tax conference in Brussels, said the debate on a common consolidated corporate tax base has been going on for a long time. “But this is one issue that we are determined to push,” she said.

France takes over the presidency of the EU in July for six months and, together with the Germans, has been advocating a consolidated corporate tax for years.

Taxation Commissioner Laszlo Kovaks is expected to publish proposals for a common tax base shortly despite opposition from a number of countries.

“Whether you have 12.5% in Ireland, or 33% in France, or 15% in Germany, is irrelevant. What matters is what is the ultimate taxation paid by companies. That depends on two things — the tax rate and the basis. Agreeing on the basis would be extremely positive. So we will push for that,” said Ms Lagarde.

She did not believe a common tax base would reduce Europe’s competitiveness with the rest of the world in attracting business.

“We hope to overcome the resistance and we will try to be as comprehensive as we can to convince our colleagues that competition is fine… having a comprehensive consolidated tax bases would be significant progress,” she said.

Asked to explain why Ireland was so afraid of the common tax base, she said she had never met a scared Irish person in her life.

Competitiveness Commissioner Gunter Verhuygen said the move would improve the functioning of the internal market, but that harmonised rates would not help the problem of Europe’s competitiveness.

“If the tax burden is too high companies will move to another place. I do not complain about this — member states are intelligent enough to use the system to prevent this from happening,” he said.