THE INTRODUCTION of a common consolidated corporate tax base in the European Union would harm Ireland’s economy, according to a report published yesterday by Oxford University.

The proposals would benefit Belgium most and would see a 2 percentage point increase in gross domestic product, but Ireland’s figures would fall by 3 percentage points, while the UK would suffer marginally, with just a 0.05 percentage point drop.

The examination was carried out for the European Commission by the Oxford University Centre for Business Taxation at Said Business School, in alliance with the CPB Institute in the Netherlands.

“There would be considerable variation in the economic effects of the new tax system on EU countries,” said the report, adding that the total value of the EU’s economies would fall slightly, by 0.15 percentage points.

Equally, there would be no net gain in employment or wages in the EU as a whole, while capital expenditure by multinational companies based in the EU would fall by 0.74 percentage points.

Headline corporate tax rates in the EU range from 10 per cent in Cyprus and Bulgaria to over 35 per cent in Germany and Italy, with Ireland and the EU states that joined in 2004 having “relatively low” rates, the report pointed out.

“Given the high shares of FDI in Ireland and the Netherlands [which holds primarily large stocks in high-tax countries], these are the countries that lose most,” it went on.

The effect of a common rate would depend on the definition of taxable profit, and the formula used for allocation, with the UK doing better, for example, if the formula was based on capital and payroll rather than employment.