European Business Rejects Call For Tax Harmonisation

by Ulrika Lomas, Tax-News.com, Brussels

10 September 2004

The body representing the interests of business throughout the European Union has urged the European Commission to reject any policy that leads to harmonisation of EU corporate tax rates.

"Harmonisation of corporate tax rates is unacceptable and rules out business and industry support for the project," UNICE Secretary General Philippe de Buck stated in a letter to Internal Market and Taxation Commissioner Frits Bolkestein.

"Such a development would impede tax competition between the member states, which is an indispensable counterweight to the upward pressure on government spending."

Mr de Buck’s comments come as leaders in the old EU15 increase their calls for measures preventing the new entrants to the EU club, mainly in Central and Eastern Europe, from undercutting corporate tax rates whilst at the same time using EU structural aid to bolster infrastructure. This view is held particularly strongly in Paris and Berlin.

Nevertheless, UNICE is open to the idea of harmonising the EU’s corporate tax base, which it says would make life considerably easier for firms conducting business in more than one member state.

"Having to satisfy the requirements of 25 different tax authorities runs counter to the concept of the (EU) single market and seriously affects the competitiveness of European business and industry," observed Mr de Buck.

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