Taxing times Cowen defends corporation rate against French
Published 18/12/2010 | 05:00
Taoiseach Brian Cowen has lashed out at French criticism of Ireland's 12.5pc corporate tax rate, saying the EU should be glad companies are settling in Europe rather than Asia.
"It is open to member states to decide what sort of a tax regime they want in their respective states and we respect that," Mr Cowen said yesterday after a two-day summit of EU leaders.
"There are companies located in Ireland who could otherwise perhaps, were we not able to provide the pro-business environment we do, have located in Singapore, Korea, Israel and other parts of the world, as well as possibly locating in other parts of Europe," Mr Cowen said.
"It's important to point out that those are the competitors we're competing with for those types of industries."
French president Nicolas Sarkozy accused the Government of undercutting its European partners while forcing them to take on the country's debt burden.
"It's a curious system that allows a certain country . . . to set its corporate tax rate at the lowest level in Europe, and the country that can do that has the capacity to transfer and transmit its debt to the European level," Mr Sarkozy said. "It simply doesn't make sense.
"To say 'For my income I'm totally autonomous or totally sovereign but for my debt I can transfer it to a higher level' -- can you imagine what that means?"
He made the comments after a summit in which EU policymakers were at pains to put up a united front in the face of the debt crisis.
In an effort to ward off market speculation, leaders on Thursday night inked a deal that makes minor changes to the Lisbon Treaty to allow them to set up a permanent crisis fund for cash-strapped eurozone states, which will come into being in 2013.
"Ireland doesn't have the lowest corporation tax in the EU," Mr Cowen insisted.
In fact, Bulgaria and Cyprus both tax business profits at 10pc.
"Ireland has a transparent straight-forward system of 12.5pc corporation tax for all companies operating in Ireland," he added.
Ireland's corporation tax came under renewed stress after it applied for a €67.5bn dig-out from its EU partners and the IMF, with Germany and France angry that the state has an unfair advantage on the investment front.
A group of eight mostly German and French MEPs last month upped the ante, signing a declaration that calls for a doubling of the Irish rate.