New EU Members Back Tax Competition, Says Estonian Finance Minister

by Ulrika Lomas, Tax-News.com, Brussels

27 August 2004

Speaking to reporters on Wednesday, Estonian Finance Minister, Taavi Veskimagi revealed that the ten new EU member states support the maintenance of differing corporate tax rates in order to boost competitiveness within the Union.

Mr Veskimagi told a news conference that in response to calls from higher taxing member states such as France and Germany to harmonise corporate taxes, Estonia had sent out a paper on the issue to its fellow new members in order to canvas opinion.

"In talks with my colleagues from many new EU member states, I've gathered a common understanding that competition between all member states has to be maintained," he announced.

This stance contrasts with the viewpoint expressed earlier in the year by Estonian Commissioner to the EU, Siim Kallas, who was quoted by the Finnish business daily, 'Kauppalehti' as observing that:

"Countries with higher taxation can offer many discounts and exceptions thanks to which companies do not need to pay any taxes at all. The new member states are forbidden from using such exceptions, so in countries with low taxation everyone nevertheless has to pay taxes."

"The situation is extremely unjust for the new countries. I therefore support tax base harmonisation."

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