Economically battered Ireland is wary of increasing pressure on its low corporation tax under a new Europe-wide standardisation proposal out of Brussels. Yet the commissioner in charge said companies will not be forced to play by the Common Consolidated Corporate Tax Base rules.
The top EU taxation official, Algirdas Šemeta, said:
“The CCCTB is a system designed for every size of company. Bearing in mind that small and medium sized enterprises are the backbone of the European economy, the CCCTB will be optional for companies, meaning that they will be able to decide for themselves whether they think it is worth using it or whether they would prefer to stay within the national system.”
Germany and France pressed new Irish Prime Minister Enda Kenny at an EU leaders’ summit last week to bring Ireland’s business taxes into line with the rest of Europe. Dublin’s 12.5 percent corporate tax rate has attracted rich foreign investment over the last decade. Some economists say raising this rate would increase the risk of Ireland being unable to pay back loan money.
Heidi Lougheed, with the Irish Business and Employers Confederation, said: “We know from talking to companies… there is one thing they really like when they are looking at corporation tax and that is predictability. They like understanding how the system works, for the system to be simple, transparent, and [for the system] to stay the same. We don’t think this will. There are too many parameters. There are too many things going on, and everyone needs to get their head around it, even just to understand it.”
The Irish insist that their economic recovery depends on the international firms that choose to locate in Ireland because of the low tax, and, even to get better terms on their bailout loans, they do not want to give it up.