EU-wide tax system faces opposition

Seven member states are set to oppose plans for a Europe-wide corporate tax system, which were launched by the European Commission yesterday (2 May).

The proposals, which also provoked a clash within the Commission, with several commissioners objecting to them, would set standard rules for companies calculating their tax base across the EU, to replace the 27 different national systems currently in use.

The Commission says this would make it easier for companies to work across EU borders and cut the risk of double taxation.

Cyprus, Ireland, Lithuania, Latvia, Malta, Slovakia and the United Kingdom have said they will oppose the common tax base, which requires unanimous support from all member states to become law. The seven countries fear a European corporate tax base could be the first step towards broader EU tax harmonisation and could lead to some member states having to raise their tax rates.

"I know this project is an ambitious one and has raised some scepticism from certain member states and questions that are to be answered," said László Kovács, the European tax and customs union commissioner. Kovács last year said that the EU could launch a common tax base with only a limited number of countries on board. But yesterday he said that at this stage the Commission still hoped for the support of all 27 countries.

The Irish Banking Federation (IBF) said it was "vehemently opposed" to an EU corporate tax base. IBF Chief Executive Pat Farrell said that the proposal "would spell bad news on the jobs front, for our standard of living and for the economic and social well-being of people generally".

Seven member states are set to oppose plans for a Europe-wide corporate tax system, which were launched by the European Commission yesterday (2 May).