A common EU tax rate for company profits is a distant prospect, but a common way of determining what should be taxed would bring benefits, Austrian Finance Minister Karl-Heinz Grasser said today.
The European Union executive wants to propose a harmonised company tax base in 2008 to save money for cross-border firms, as they would not then have to comply with several different tax regimes.
The aim would be to replace the 25 different national systems in the EU and enable firms to use the same rules for calculating tax on all their EU-wide activities.
Britain and Ireland oppose the plan because they fear it would be the first step to a common EU tax rate, and several other states also opposed or unconvinced. Unanimity among the bloc's members is needed for new tax rules.
"I am convinced that a common consolidated tax base could be an effective way to address tax obstacles for companies operating in more than one member state," said Mr Grasser, whose country Austria holds the EU presidency and was hosting a meeting of EU finance ministers.
"It's especially important for small and medium sized companies as far as their administration costs are concerned, and have to adapt to 25 tax regimes. This would be a major step forward," Mr Grasser said.
A common tax base would allow a company to offset losses in one member state against profits made in another - a principle the European Court of Justice backed last year in a case brought by British retailer Marks & Spencer.
Revenue would be shared among member states according to how much of a company's business was conducted on their turf. Mr Grasser cast doubt on the Commission's timetable, however.
"In my opinion you will not see any harmonisation of tax rates in the next 10 to 15 years. It's not on the agenda," Mr Grasser said.
Mr Grasser hoped for "serious progress" on the subject by June but EU sources said this week that Slovakia, Lithuania and Latvia were also opposed.