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Ireland Resisting EU Tax Harmonization

by Jason Gorringe,, London

15 September 2017

Irish Finance Minister Paschal Donohoe has signalled that the Government will not accept any attempt by the EU to change the system for voting on headline tax policies.

In his State of the Union Address this week, European Commission President Jean-Claude Juncker said he was in favor of the EU "moving to qualified majority voting" for decisions on key tax proposals, such as the common consolidated corporate tax base (CCCTB), VAT, the taxation of the digital industry, and the financial transaction tax.

A qualified majority is reached if two conditions are met: 55 percent of member states vote in favor, and the proposal is supported by member states representing at least 65 percent of the total EU population. At present, a unanimous vote is required on matters member states consider to be sensitive.

In an interview with Irish broadcaster RTE, Donohoe said: "I and this government will not participate in any decision that changes our ability to protect our national interest on key issues like that. The need for unanimity is a core issue of how the European Union manages issues like this."

Donohoe added that other EU member states will take the same view as Ireland.

There was also a warning this week from Seamus Coffey, head of the budget watchdog the Irish Fiscal Advisory Council, that the EU's plans for a CCCTB represent a "threat to Ireland."

Coffey told the Irish Parliament's committee for budgetary oversight that the policy would "be a dramatic shift in terms of the allocation of taxing rights." He pointed out that corporation tax's share of Ireland's overall tax take is approaching its highest ever level and that, if it was "subject to the threat that CCCTB would introduce we would see adverse consequences for Revenue, and of course there would be broader adverse consequences for our ability to attract foreign investment."

Coffey also cautioned that the EU moving from unanimous to qualified majority voting on policies such as the CCCTB would "be an important change for Ireland."

TAGS: tax | investment | European Commission | value added tax (VAT) | Ireland | budget | corporation tax | ministry of finance | tax rates | tax reform | European Union (EU) | Europe | Tax | BEPS | Financial Transactions Tax (FTT)

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