Oireachtas findings put State on collision course with EU over tax
Published 13/05/2011 | 05:00
Ireland was on collision course with the European Commission last night over corporation tax, after the key Oireachtas committee considering Europe's proposals claimed they breach EU principles and are too vague to be properly assessed.
France and Germany both want Ireland to study the proposals for a new streamlined system of corporation tax known as CCCTB (Common Consolidated Corporate Tax Base) and the EU Commission is pushing the new system vigorously too.
But last night the Oireachtas committee rejected the proposals and now it looks certain that Ireland will formally reject them when EU finance ministers meet late next week.
Under the CCCTB system the tax bills of companies who have offices around Europe would be calculated centrally.
Whereas at present companies can funnel a large amount of their revenues through Ireland, even if the businesses are not substantially based here.
The CCCTB proposals do not comply with the principle of subsidiarity, the committee concluded. Subsidiarity is a legal requirement in the Lisbon Treaty to ensure that the EU only proposes ideas that improve what has been put in place by national parliaments.
The Oireachtas committee concluded:
- The EU failed to provide sufficient detail which would allow national parliaments to fully assess the impact of CCCTB.
- The Commission has not established that EU legislation was justified.
- The plan would introduce a second "parallel tax system'' within each member state.
- There is a concern that the proposal may suit larger member states more and does not adequately address the needs of SMEs.
Committee chair, Charles Flanagan said: "This draft directive fails the subsidiarity test on a number of counts. It is too vague and fails to establish a coherent case that CCCTB would be of benefit to Ireland and the EU as a whole. Much of the justification is based on assumptions and there is insufficient data available on the implications of this new policy."
The committee was specially set up to consider the CCCTB system.
The committee's recommendation will be passed on to the Dail early next week.
A debate is expected to be held in the Dail on Tuesday on the committee's report. The deadline for the Dail to give its opinion on the plan's compliance with subsidiarity is next Wednesday.