High Tech Sector In Ireland Warns Against EU Tax Harmonisation

by Jason Gorringe, Tax-News.com, London

20 March 2002

The Irish high-tech sector has warned the Government against adopting tax harmonisation proposals introduced by French Prime Minister, Lionel Jospin at this weekend's Barcelona summit.

Speaking earlier this week, the head of Microsoft's Irish division, and chairman of the Information and Technology Committee (ICT) warned that a move to harmonise Ireland's corporate taxation rates with those of countries such as Germany and France could seriously damage the jurisdiction's ability to compete at an international level.

Kevin Dillon revealed that there are currently around 100,000 Irish residents employed in the ICT sector, and that 55,000 of those positions are provided by foreign owned companies, which have chosen to locate in the country because of its favourable corporate taxation regime.

Mr Dillon argued that several other countries, such as Estonia and Singapore, are now beginning to nip at Ireland's heels in terms of the provision of attractive corporate tax rates, and strongly cautioned against harmonising the jurisdiction's rates with higher tax member states.

'It's time we began to realise that we are losing competitiveness against a number of other countries all of whom are trying to attract foreign investment,' he explained, adding that: 'If we consider that the ICT sector was already in a period of consolidation and post-September 11 the situation has become even more confused, it is vital that we manage those issues under our control.'

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