Business Irish

Monday 26 June 2017

No threat to 12.5pc tax rate from Brussels, vows EU chief

Reassurance: Pierre Moscovici. Photo: REUTERS
Reassurance: Pierre Moscovici. Photo: REUTERS
Donal O'Donovan

Donal O'Donovan

EU plans for a single corporate tax regime appeared to be on the edge of oblivion yesterday, amid a repeated insistence that Brussels won't threaten Ireland's key 12.5pc tax rate.

On a charm offensive in Dublin, Europe's powerful Commissioner for Economic and Financial Affairs Pierre Moscovici pleaded with Irish policymakers to at least listen to his proposals for a so-called common consolidated corporate tax base (CCCTB).

At a number of events, he insisted that the CCCTB proposals were not an attack on Ireland's ability to set tax rates.

"The EU poses no threat to Ireland's corporate tax rate. The only way that the 12.5pc can be changed is by the Irish Government itself," he said.

The EU corporation tax proposals were "not acceptable" to Ireland, Finance Minister Michael Noonan told a conference organised by the 'Irish Times' in Dublin.

Mr Moscovici accepted that opposition here could kill the plan, but insisted the proposals could benefit all countries, including Ireland, if given a chance.

"There won't be CCCTB if Ireland doesn't want it," he told TDs and senators at the Oireachtas Finance Committee, one of a series of events where he sought to highlight the benefits of the scheme.

The commission was prepared to compromise on proposals that he said had changed from the previously rejected plan, he said, in an effort to win over support. "CCCTB is not a diktat from Brussels," he said.

"The only thing I want from Ireland is that we have a discussion, I would like to demonstrate that the formula is a good one," he told TDs and senators.

The CCCTB plan would see large companies pay a share of the tax paid on profits in countries where sales take place, and many policymakers here think that would favour larger EU members over smaller countries, including Ireland, that have a higher share of multinationals.

Mr Moscovici revived the plans last year, despite previous opposition from member states including Ireland.

The EU Commission's proposed CCCTB would not mean harmonisation of tax rates across Europe, but it would force Ireland to choose just one of the current three tax rates that apply to corporate activities here, Mr Noonan said.

Accepting the plan would restrict Ireland's ability to use tax policy to differentiate how activities were taxed, he said. "We would lose the flexibility to tax some profits and capital gains at a higher rate. This is not acceptable," he added.

Adopting EU rules that diverged from international standards applying to businesses in Ireland's main trading partners - the UK and US - would be especially harmful, Mr Noonan said.

Ireland's strong cultural and commercial ties with the US and with the UK made it essential that Europe did not depart from an international consensus on tax, he said.

At the Finance Committee, which Mr Noonan did not attend, Mr Moscovici faced near-universal opposition from Irish policymakers. His efforts to win support hit a major hurdle when he was unable to provide evidence that the plan would not leave the Irish Exchequer worse off. The impact assessment looked only at the potential impact of CCCTB on an EU-wide basis, he said.

"We have not made a precise calculation country by country," he said, in what amounted to a devastating admission.

Irish Independent

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