Saturday 20 January 2018

Noonan denies Cyprus bailout will force corporate tax hike

Fiach Kelly Brussels

FINANCE Minister Michael Noonan has insisted proposed moves to increase corporate tax rates in Cyprus as part of its bailout will have no effect on Ireland's 12.5pc rate.

Mr Noonan and other European finance ministers were meeting in Brussels to agree a bailout for Cyprus, which is believed to need around €10bn in assistance.

A reported part of the deal would see the Cypriot corporate tax rate rise from 10pc to 12.5pc, the same level as Ireland's.

The Irish rate has been has been repeatedly questioned by other European leaders, but Mr Noonan says that any hike in Cyprus would not affect Ireland.

"If this happened it would be something the Cyprus authorities would have agreed to," Mr Noonan said.

"As well as that, if it moves from 10 to 12-and-a-half, it looks as if the kind of lower end of the spectrum for European corporate tax rates is settling around 12-and-a-half and that's where we are.

"And under the treaties, fixing of tax rates across the basket of taxes is a matter for sovereign governments so we stand by the treaty, we don't think it will affect us."

Taoiseach Enda Kenny was also in Brussels yesterday for the conclusion of a two-day European Council summit.

Speaking after the summit, Mr Kenny said he detected no rowback among other EU countries on commitments to help Ireland with its banking debt because of this week's successful bond sale.

The sale of €5bn in 10-year government bonds moves Ireland closer to exiting the bailout, but Mr Kenny says this will not make other EU countries less inclined to help with banking debt.

"The perception that because you have made progress shouldn't be that you emerge unscathed for the future," Mr Kenny.

"That's why it's all the more important and all the more necessary that support committed to by our European colleagues will be delivered on and I expect that to happen. I certainly have not detected any iota of rowback on that."

He said the Government still wanted to get retrospective recapitalisation of the banks as part of EU efforts to break the link between banking and sovereign debt, and to extend the maturities of bailout loans.

"Ireland's objective here is to recover as much as a possible for our taxpayer," the Taoiseach added.

"I have detected no sign of anybody rowing back on commitments already made.

"We've been at pains to say that because we've done so much to help ourselves that the co-operation and the commitment entered into by Europe would be honoured in full and I expect that to happen."

He also said that he would have the opportunity to speak with US President Barack Obama about a proposed US-EU trade agreement when the pair hold a meeting in the White House next Tuesday.

Irish Independent

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