Government confident on tax rate

The Government today said it was confident EU member states would agree to guarantee its low corporate tax rate, a move that would ring-fence a key element of its industrial strategy against calls for greater fiscal union in Europe.

In 2009 the EU promised to protect Ireland's 12.5 per cent corporate tax rate - a factor in attracting overseas investment - as part of a deal to ensure Ireland ratified the Lisbon Treaty on EU institutional reform.

Since that promise was made, the iconic rate has come under attack from some European countries, in particular France, who view it as anti-competitive and believe Ireland should have to raise it in return for being bailed out by Europe.

Minister for European Affairs Lucinda Creighton said today she had asked the EU to attach the formal guarantee of the tax rate to Croatia's accession treaty, which is due to be signed later this year.

"What we are proposing is a technical implementation. I don't envisage any problems at this point," she said.

France dropped its demand over the summer that Ireland raise the corporate tax rate in return for a lower interest rate on its rescue loans but Ms Creighton said arguments over Ireland's tax rate could re-emerge as Europe seeks an end to a protracted debt crisis.

"There is no doubt but there is a difference of opinion on this issue," she said.

"I certainly would not be in any sense saying that no leader of another country or no government from a member state won't wish to raise that topic in the future, but this doesn't provide that opportunity because this agreement has already been reached."

In addition to the tax guarantee, Ireland also won guarantees on its military neutrality and its permanent commissioner on the European Commission. Those will also be attached to the accession treaty.

Croatia is expected to sign its European Union accession treaty in late November or early December. It would then become a full member in 2013 if the treaty is approved by all EU states.

Reuters