Any attempt by the European Union to restrict national sovereignty in the area of corporate tax rates is unlikely to be in the interests of the Republic and should be resisted, a new report says.

The report, One Size Fits All? EU Taxation Policy, highlights the importance of a low corporation tax regime in attracting foreign direct investment to the Republic.

It cites studies which find that EU tax harmonisation would affect the Republic adversely and questions whether greater tax harmonisation would make the EU more or less competitive.

It concludes that current academic analysis suggests there should be no further loss of national sovereignty in this field.

Edited by chancellor of the University of Limerick, Dr Miriam Hederman O'Brien, it was prepared by the Institute of European Affairs and published jointly with the Institute of Taxation in Ireland.

The report also puts forward a number of principles for devising an effective tax strategy for the EU, with the aim of creating a framework which allows for flexibility. In determining the correct approach for formulating a workable EU tax strategy, Dr Hederman O'Brien suggests that one must decide whether to isolate taxation from the wider question of the relationship between the member-states and the EU or to treat it as a key policy area.

She recommends the latter, citing the experience of European monetary policy as an example.