The EU Taxation Commissioner Laszlo Kovacs has published his latest proposals for creating a common tax base for corporation tax across the EU.
The proposals have been criticised by the Government and Irish business groups, who fear it could be the first step towards harmonising corporation tax rates.
The commissioner says the plans will reduce the regulatory costs for companies which do business in several countries in the EU. He acknowledges that the proposals have met with a sceptical response from some member states.
Mr Kovacs today published an update on the plans ahead of a formal proposal next year. It calls for the common tax base rules to be 'broad, simple and uniform', with as few exceptions as possible.
The EU body wants firms operating across borders to be able to file tax returns based on a single system to save the cost of complying with different national regimes. A common tax base would allow a company to offset losses in one member state against profits made in another.
IBEC said today's European Commission proposals would not strengthen the competitiveness of the EU and would be particularly damaging to the economies of smaller member states such as Ireland.
Chief economist David Croughan said: 'In the case of Ireland, which exports the greater part of its output to the larger central economies of the EU, companies would see part of their profits, currently taxed at 12.5%, apportioned to other higher taxed member states such as Germany or France'.
He said the CCCTB will ultimately reduce the flexibility of the EU's corporate tax system, as the agreement of a large number of member states will be required in order to make any changes, with additional administrative layers making change more difficult.
Gina Quin, CEO, Dublin Chamber of Commerce said the Commissioner's proposals will inevitably lead to pressure to increase corporate tax rates and divert investment and jobs from Ireland and the EU.
She said the successful development of Dublin's IFSC district would simply have not been possible under a CCCTB, adding that it would reduce tax competition and make Ireland and Europe less able to compete internationally.
The Irish Bankers Federation said the proposals would seriously undermine Ireland's competitiveness and lead to greater uncertainty for businesses.
