Saturday 24 March 2018

Corporate rate to remain under new EU guidelines -- Semeta

Sarah Collins in Brussels

EU tax supremo Algirdas Semeta has insisted he will push forward with plans to bring the bloc's corporate tax rules closer into line, but has said he will keep his hands off Ireland's 12.5pc rate.

The European Commission will set forth new rules on how to calculate taxes on company profits in the new year, but Mr Semeta said this will not affect corporate tax rates.

"We don't have any intention to address tax rates," he told the Irish Independent. "Personally, I believe member states should be left with the possibility to define the rate they think appropriate."

The proposal will target both large and small companies operating in more than one member state, allowing them to compute their taxable income according to one set of rules.

The system will be optional, he said.

"If businesses are not happy with it they could remain with the national tax system," he said. "It would also create some competition between member states' taxation systems and an EU tax regime on corporate income."

Brussels is keen to attract more overseas investors and says harmonising the rules would make it easier and cheaper for firms to do business across the bloc.

"Europe needs a significant increase in foreign direct investment and the variety of tax systems in member states is a real obstacle for foreign investors," said Mr Semeta.

But Irish companies are sceptical, saying an EU tax base would hike up tax bills and lose the Government much-needed revenues.

Ireland can scupper the plans as EU tax matters require the assent of all 27 countries to pass. However, when the debate on a corporate tax base first began over a decade ago, the commission indicated it would be willing to plough ahead with a core group of member states on board -- a procedure known as "enhanced co-operation".

Under the Lisbon Treaty, the support of at least nine countries is required to go it alone.

Mr Semeta set out his ideas at a meeting with Finance Minister Brian Lenihan on Monday, who responded "openly and frankly", the commissioner said.

A Department of Finance spokesman yesterday said: "We remain sceptical of proposals to harmonise the tax base, but we are committed to working with our EU partners."

Irish Independent

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