BULGARIA’S FINANCE minister has backed Ireland’s stance on corporation tax. During a visit to Dublin yesterday, Simeon Djankov described his country as an “ally” in the fight against EU tax harmonisation.

Mr Djankov expressed solidarity with Ireland and its defence of its corporation tax rate. He said it was in the interests of at least 10 EU states to resist the push for a harmonised tax base.

Harmonisation would benefit very few countries “at the expense of everybody else”, he said.

Bulgaria also has a low flat rate of corporation tax (10 per cent compared to Ireland’s 12.5 per cent), but the effective tax rate is almost the same as the nominal rate.

Mr Djankov added that small open economies like Ireland and Bulgaria did not have the competitive advantage of large domestic markets, which the larger member states did.

The current push for harmonisation was “misguided” and displayed a lack of economic understanding, he said.

The EU as a whole would lose competitive advantage to other large players such as China and Brazil if there was a move to high taxes and exemptions. If international corporations were willing to move from smaller to larger EU states, they could also move to non-EU regions, to the detriment of total EU tax revenues.

Although the pressure on Ireland to increase its corporation tax rate had been more “pronounced”, Bulgaria had also received a lot of “urging” to rethink its tax system, he said