Tax Competition Healthy, Says Monti

by Ulrika Lomas, Tax-News.com, Brussels

06 March 2002

EC Competition Commissioner, Mario Monti has stated that in the view of the European Commission, corporate tax competition within the EU is healthy, as long as it does not aim to encourage specific companies to move from one member state to another.

Speaking in Stockholm on Monday, Mr Monti explained: 'We believe that a certain amount of tax competition is healthy, that is why it has not been decided to harmonize the rate of corporate taxation.' He went on to say that: 'A line of distinction has been drawn between harmful tax competition, which has to be combatted, and non-harmful tax competition.'

The Competition Commissioner was commenting on recent moves by the Portuguese Government, which is rumoured to have offered favourable tax rates to German manufacturer, Continental, in order to encourage it to relocate a factory from Sweden to Portugal. However, he explained that low corporate tax rates are not considered to be harmful if the rate is applied across the whole industry, region, or country.

In any case, as regards the Continental case, Mr Monti revealed that: 'So far we have received no complaint [from Sweden] and no notification from Portugal [about tax reductions].'

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