Common tax talks unlikely to meet deadline, says Creighton

IT IS unlikely that negotiations on the European Commission’s proposal for a common consolidated corporate tax base (ccctb) will be completed by the end of 2012, Minister of State for European Affairs Lucinda Creighton said last night.

European member states have a deadline of the end of 2012 to negotiate positions on the tax base, according to the joint letter sent by French president Nicolas Sarkozy and German chancellor Angela Merkel to the European Commission in the wake of the July 21st euro zone deal. The document states that euro area member states should be ready to consider enhanced co-operation for further progress on tax co-ordination.

Speaking at a seminar organised by the International Fiscal Association in Dublin yesterday evening, Ms Creighton said there was likely to be a lengthy process of consideration, particularly as many member states have already signalled reservations in their national parliaments.

“Such a timetable is, at the very least, optimistic, and probably quite unreasonable,” she said.

Reiterating the Government’s opposition to any change to the corporate tax rate, Ms Creighton said the Government maintains a “healthy scepticism” towards the proposal. “That is not to say we don’t engage in the process. We believe we are better served by engaging in the process and putting forward our own perspective,” the Minister said.

Her views were reiterated by Gary Tobin, head of business tax at the Department of Finance. “The department is steadfastly committed to the 12.5 per cent corporate tax rate,” he said. “However, we are not opposed to greater co-operation between European states. We favour more targeted solutions, however.”

Chairman of the International Fiscal Association Ireland and head of tax at Maples and Calder Andrew Quinn said the corporate tax issue was not only of crucial importance for individual countries, but for Europe as a whole.

“Europe needs to remain competitive in order to attract business into Europe, rather than lose that business to other competing jurisdictions such as Switzerland, Israel and Singapore,” he said.

Fergal O’Brien, chief economist at Ibec, said that while there was a perception that a common tax base would address business concerns, the position of business representative groups such as Business Europe was in fact “quite nuanced”.

“While businesses initially supported it, most businesses are supportive only if ccctb is optional and consolidated from the outset. The principle of optionality cannot be guaranteed.”

He pointed out that the commission’s own research found that while the ccctb would generate some savings for start-ups, it would save existing businesses only an estimated 1 per cent.