A proposal for a common European-wide corporate tax base is not an attack on Ireland's sovereignty and it will not be introduced without the country's backing, European Union economic affairs and taxation commissioner Pierre Moscovici has stressed.
Appearing before the Oireachtas Joint Committee on Finance, Public Expenditure and Reform on Tuesday, Mr Moscovici, who earlier in the day spoke at The Irish Times Corporate Tax Summit in Dublin, told TDs and Senators that a so-called common consolidated corporate tax base (CCCTB) would not be introduced unless Ireland supported the plan.
“Ireland can be reassured that there won’t be a CCCTB if Ireland doesn’t want it,” he said.
"The European Commission respects fully Ireland's sovereignty in this policy area. Indeed, this sovereignty is protected [and so] there is no cause of concern on this front and there won't be any threat of attack against Irish tax sovereignty," he added.
Speaking at the finance committee, Labour Party TD Seán Sherlock said there was a large degree of scepticism regarding the CCCTB proposal in Ireland.
Benefits
However, Mr Moscovici stressed there were benefits for all member states, and especially Ireland, in having a European-wide common tax base.
“I truly believe that Ireland has a lot to gain from the CCCTB, especially given today’s economic and political climate,” he said.
The commissioner also stressed that neither he nor his colleagues could force any country to sign up for the plan.
“It is up to individual countries to decide if they support it,” he said.
Although proposals for a common tax base have been floated for the past decade and a half, plans to standardise the way taxable profits are calculated have intensified recently.
A CCCTB would allow companies to submit one centralised tax return across all EU countries in which they operate. Their taxable profits would then be split between the member states in which they operate, with countries retaining the right to set their own rate of tax.
Ireland is against the proposals amid concerns it could make it more difficult for multinationals to take advantage of the country’s low 12.5 per cent corporation tax rate.
Reduced flexibility
Speaking at The Irish Times' Corporate Tax Summit earlier on Tuesday, Minister for Finance, Michael Noonan, said the CCCTB proposals would narrow Ireland's corporate tax revenue and reduce his flexibility in framing the annual budget.
Mr Moscovici praised Ireland for actively contributing to the EU tax agenda.
“ Although Ireland is famously cautious on EU proposals in the taxation area, the Irish have always been fair and constructive negotiators and their contribution to shaping EU policy is valued and appreciated,” he said.
The commissioner also disagreed with a claim by Anti-Austerity Alliance–People Before Profit TD Paul Murphy that Ireland was a tax haven.
“While Ireland has not always played fair in the past it has done impressive work to tackle tax avoidance and support the agenda for fairer taxation,” he said.
Mr Moscovici added: “The phasing out of the ‘double Irish’ is very crucial, along with the legal change of stateless companies, and I’m also impressed that Ireland has been a leader in some of the tax actions, for example legislating for country-by-country reporting to the tax authorities and it is also one of the few member states to have mandatory disclosure for advisers.”
