Ireland to fight tax harmony by the back door

IRELAND is to fiercely oppose what its Prime Minister Enda Kenny has called an EU attempt at “harmonisation of taxes by the back door”.

Proposals published by the European Commission (EC) yesterday aim to offer companies a single set of rules for calculating their corporate tax across the whole EU.

But the proposals have been launched during a row about Ireland’s 12.5 per cent corporate tax rate, which France has said Dublin must raise in return for a lower interest rate on its €85bn (£74bn) bailout. The rules would not mandate a uniform EU corporate tax rate, but would offer businesses the option of filing a single tax return with their main national regulator on all their European profits.

The commission said it would save businesses €700m in compliance costs and €1.3bn from being able to offset losses across borders. But tax lawyers called the proposals “simplistic”. “They’ll have to be a raft of guidance in practice,” said Eloise Walker, a partner at Pinsent Masons, adding they would impose an administrative burden on HMRC. And once introduced, they could also make it easier to harmonise tax rates. “What the EU wants ultimately is a common corporate tax rate,” said Walker.