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Brexit means harmonised corporation tax closer

Brexit will make it much more difficult for Ireland to fight plans by the European Commission to standardise the way corporation tax is calculated and paid across the EU, an academic has warned.

Aidan Regan, an assistant professor at the School of Politics and International Relations at UCD, said the UK’s withdrawal from the European Union will accelerate the drive to harmonise corporate income taxes.

He said the Franco-German preference is for increased tax harmonisation, with the common consolidated corporate tax (CCCTB) base proposals a part of that.

The Government is opposed to the plans, which include making companies pay tax in countries where sales are made rather than where businesses are controlled.
In Ireland’s case, it would undermine the competitiveness of the 12.5pc corporate tax rate that has helped make the country a favourite European base for US multinationals.

“Britain was the most vociferous voice against the CCCTB proposal,” Mr Regan told a recent sitting of the Oireachtas Finance Committee. “It was absolutely unafraid to use its veto in the case of something like this coming along in actually forcing a vote, but, of course, one would not vote on it. With Britain gone, a variety of policies come into play that will strengthen the voting behaviour of France and Germany within the Council. It has become much more difficult for a small open economy on the periphery of north-western Europe to become the biggest obstacle to what the core strategic players in this process want.”

Mr Regan said Ireland is already in the spotlight in Brussels, Frankfurt and Paris for “facilitating global corporate tax avoidance, not least in the Apple case”.

“Significantly, it represents a small portion of the overall population of the European Union. Hence, a core political economy question for Ireland is whether it is in Irish interests to veto such a strategic policy which is fundamentally aimed at building the problem solving capacity of the European Union to avoid the potential side effects of a country in the north west of its region [UK] turning itself into a low tax regulatory environment,” Mr Regan said.
Last week outgoing Finance Minister Michael Noonan said the European Commission promotes the interests of larger countries and no longer stands by small states. He said this was particularly the case in plans for a CCCTB.

Article Source: http://tinyurl.com/kbwqb42


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