Harmonisation of business tax rates across the European Union was not on the agenda, the chairman of the Revenue Commissioners told the World Tax Conference in Dublin yesterday.

"While corporation tax rates are coming down in all the major countries, differences in economic and social frameworks, and in budgetary situations, make talk of harmonisation a pipe-dream," Mr Dermot Quigley said.

Instead, he said, there was a creeping acknowledgment that some element of tax competition was a good thing and the focus was likely to be on practical measures to remove obstacles to doing business within the EU.

To this end, national tax measures that facilitate tax abuse or result in double taxation would increasingly come under the microscope. Ireland's special 10 per cent tax rate has already fallen foul of this. The 10 per cent manufacturing tax rate will end in 2010 and the IFSC and Shannon 10 per cent rates cease in 2005. But the new 12.5 per cent corporate tax rate, which kicks in on January 2003, is seen as a general and not "niche" tax regime, which is acceptable.

Tax avoidance on savings is also under the hammer. Placing money in another jurisdiction to avoid paying tax in the country of residence will not be so easy in the future and a specific Savings Directive is under way to tackle this.

Similarly, "transfer pricing" across borders has become more significant with the increased flows of trade generated by the global economy.

A recent EU study estimates intra-EU transfer pricing cases which referred to mutual agreement or the arbitration convention more than doubled in 199598. Ireland has only limited experience of mutual agreement procedures on transfer pricing cases and none so far on the arbitration convention, said Mr Quigley.

Another concern is the swiftly evolving e-commerce arena. Trading through the World Wide Web opens up new difficulties in terms of tax liability.