EU Corporate Tax Base To Be Harmonised ‘In Three Years’ Says Commissioner

by Ulrika Lomas, Tax-News.com, Brussels

26 May 2005

The European Union could have a common corporate tax base in place within three years if all goes to plan, EU Taxation Commissioner Laszlo Kovacs told a conference in Stockholm this week.

Currently, the Commission is working on plans to create a uniform approach to the calculation of corporate tax to be applied across the EU, in an attempt to cut red tape and boost the union's competitiveness.

"At the moment there are 25 different ways to calculate the corporate tax base," noted Kovacs. "If we manage to have only one EU-wide set of rules that will increase competitiveness."

When asked when a uniform system could be in place, Kovacs replied: "My assessment is three years if everything goes well."

According to Kovacs, 20 of the 25 EU member states are in support of a common corporate tax base. Notable objectors include the United Kingdom, which fears that the move would take away governments' ability to influence domestic tax policy and represents the first step towards harmonisation of corporate tax rates.

However, Kovacs rejected this "Trojan horse" argument and reiterated that neither he nor the European Commission has any wish to see harmonised corporate tax rates.

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