European Business Groups Warn Against Common EU Corporate Taxation

by Ulrika Lomas, Tax-News.com, Brussels

01 May 2002

European business groups have responded swiftly to EC Internal Market Commissioner, Fritz Bolkestein's renewed calls for an EU-wide common corporate base.

Speaking at the European Conference on Company Taxation in Brussels on Monday, Mr Bolkestein argued that: 'Without determined action on the tax front, the EU will fail to achieve its self-imposed objective of becoming, in this decade, "the most competitive and dynamic knowledge-based economy in the world".'

He stressed that only a 'comprehensive solution' to EU corporate taxation would be effective, and explained that a common consolidated base for the EU-wide activities of companies would reduce compliance costs for multinational companies and eliminate transfer pricing problems within the European Union.

He attempted to reassure less enthusiastic member states, such as Ireland and the United Kingdom, by arguing that the introduction of a common corporate tax base would not infringe on sovereignty, or on subsidiarity principles.

'Member states would apply their national tax rate to their specific share of the overall tax base as computed according to a commonly agreed allocation mechanism,' the Internal Market Commissioner told delegates.

However, the Irish Business and Employers Confederation (IBEC), and the European Trade Union Confederation (ETUC) were quick to urge member states to respond in the negative to this proposal.

Speaking on Tuesday, IBEC's Director of Economic Affairs, Brian Geoghegan, warned that for low tax countries such as Ireland, accepting such a move could lead to higher taxation, and would almost certainly faciliate moves towards a mandatory common tax system.

Meanwhile, the General Secretary of the ETUC, Emilio Gabaglio argued yesterday that rather than addressing differences in tax base, the EU should focus its attention on tax rates, which are leaving an impact on the labour market.

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