The European Commissioner for Taxation and Customs has said there are no plans to propose harmonising corporate tax rates across the EU.
But Laszlo Kovacs told the European Movement in Dublin that many aspects of tax rules in member states had to be 'modified' to contribute to competitiveness and the proper functioning of the internal market. He added that increased co-operation between tax authorities in member states was in the best interests of business and the public.
Mr Kovacs said the commission had proposed a common tax base for companies operating in the EU. This would allow such companies to calculate their total profits in all their EU operations according to a single set of rules. But he rejected suggestions that this was a step towards full harmonisation of corporation tax. Ireland has expressed reservations about the plan.
Mr Kovacs said there were significant problems involved in double taxation in the EU, while there were also too many tax measures which encouraged firms to invest and operate domestically rather than in another member state.
He also outlined plans for a Home State Taxation scheme, which would allow smaller companies to set up a subsidiary in another member state but use the tax rules of its home state when calculating taxable profits. But Mr Kovacs said member states, including Ireland, had been 'lukewarm' on the proposal.
Mr Kovács also called on the Government to reconsider its opposition to overhauling vehicle registration tax.
The tax brings in over €1 billion a year and accounts for 22% of the cost of the average 1.4 litre car. Commissioner Kovács said today there was a need to reform vehicle registration tax across the EU.
In some countries it costs as much as €16,000 and in others it is only a few hundred euro. He said this leads to a "fragmented market" and blocks a single market in the sale of cars.
Ireland has resisted EU pressure to change the tax. A spokesman for the Department of Finance said the tax raises more than €1 billion a year in tax revenue. He added tax is the responsibility for each member state and vehicle registration tax is compatable with EU legislation.
