The European Commission on Monday proposed a phasing out of capital duty by 2010 in order to support the development of EU companies.
Capital duty is an indirect tax levied on contributions of capital for capital companies and restructuring operations involving capital companies.
The Commission feels that given its detrimental economic effects, it represents an obstacle to economic growth. Currently, only 7 (Greece, Spain, Cyprus, Luxembourg, Austria, Poland and Portugal) of the 25 EU Member States continue to levy it.
"I consider capital duty as an obstacle to the development of EU companies. Abolishing capital duty is in line with our strategy to create more jobs and growth," announced EU Taxation and Customs Commissioner László Kovács.
The proposal seeks not only to abolish capital duty, but to reinforce the prohibition on creating or levying other similar taxes.
The plan suggests phasing out the duty in two steps. It proposes a limit of 0.5% on the rate of capital duty by 2008 and a phasing out of capital duty by 2010.
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