Business groups confident corporate tax rate safe

THERE WAS a mixed reaction from business groups to the proposed changes outlined in the EU Commission’s Communication on Reinforcing Economic Policy Co-ordination.

The Chartered Accountants of Ireland said there was nothing in the communication that could prejudice Ireland’s 12.5 per cent corporate tax rate.

The institute’s director of taxation, Brian Keegan, said the association took part in bilateral discussions on corporate tax policy in Brussels with the EU tax commissioner, Algirdas Semeta, last week where the commissioner made it “very clear” that the corporate tax rate is entirely an issue for national governments.

“EU member states set their own tax rates. There is no change to this, either by way of the commission communication or by way of other EU policy documents and recommendations, such as the Monti report published earlier this week,” Mr Keegan said. He stressed, however, that the association would continue to monitor EU policy as it evolves.

The view was echoed by the Irish Taxation Institute’s Mark Redmond, who said yesterday that the recent proposals from Europe posed no threat to Ireland’s corporate tax rate, a sovereign right that had been reaffirmed during the debate on the Lisbon Treaty referendum.

Ibec director general Danny McCoy said the business group was broadly in favour of a more co-ordinated approach by Europe to economic policy.

He said recent events had highlighted the fragility of the euro, an issue that was a concern for businesses. “It is crucial that businesses operate in a stable currency environment so any effort to address this issue should be welcomed,” he said.

He said that the uncertainty in Europe risked putting pressure on financing for businesses. “It’s not only countries that are finding it expensive to source finance; larger companies will find it more expensive to raise finance in euro denomination.”

However, he said while it was perfectly reasonable to have a co-ordinated approach in terms of deficit and debt position, the rate of taxation should remain a policy issue for individual countries.

The Irish Small and Medium Enterprises Association (Isme) said any possible changes to corporate tax would be a major concern, although the association also pointed out that VAT harmonisation could potentially emerge as a potential issue in the longer term.

Isme said the importance of the corporate tax rate was debated in detail during the Lisbon Treaty debate when members were assured that the tax rate would not be changed.

“It is a crucial issue to our members. Any change to the rate would be a cause of serious concern,” he said.