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29th Mar 2024

Brussels' appetite growing for EU-wide tax base

The European Commission is set to press ahead with introducing a single EU company tax base by 2010 in only a limited number of member states, circumventing national veto power in the sensitive tax area.

EU tax commissioner Laszlo Kovacs confirmed on Monday (26 March) he will table a controversial law harmonising corporate tax bases in 2008 despite strong opposition in several EU capitals.

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"I hope we would be able to present a proposal to the commission next year, and if we manage to get a decision on enhanced cooperation, another two years would be enough for implementation. So it could start working in 2010," Mr Kovacs was cited as saying by news agency AFP.

Brussels believes that a common corporate tax base - introducing one set of rules on what share of business profits are taxed - would reduce costs and make life easier for companies operating across borders, as now they must deal with 27 different tax systems, special tax breaks and exemptions.

But EU member states are deeply divided over possible harmonization, with 12 capitals in favour, five to seven against and the rest remaining undecided.

Britain, Ireland and the Baltic states fear that the next step for Brussels would be interference in the levels of their corporate taxes, an area where EU states compete with each other as well.

As unanimity within the bloc is far from likely, Mr Kovacs made it clear Brussels intends to move ahead using the so-called enhanced cooperation mechanism, which envisages the possibility of at least eight states to push forward with initiatives that are opposed by others.

"There should be nearly two-thirds participating and the door will be left open for others who wish to participate," the EU tax commissioner said.

He added that the sovereignty of member states as far as setting tax rates is concerned will be respected.

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