Commissioner backs Franco-German tax plan
05.07.2004 - 09:53 CET
| By Mark Beunderman
Joaquin Almunia, the European Commissioner for Monetary Affairs, has expressed his interest in Franco-German plans to introduce an EU-wide minimum corporate tax.
Commissioner Almunia told Belgian paper l'Echo over the weekend that he favours a minimum tax for companies accross the EU.
When asked whether an EU-wide minimum rate would be a possibility, Mr Almunia replied, "from my point of view, that could be a solution".
Mr Almunia's comment follows a heated debate over corporate tax levels in the EU.
The 10 new member states which entered the Union on 1 May generally have very low levels of corporate tax in order to make their economies more attractive for company investment.
Estonia has a zero percent rate for reinvested earnings while Latvia, Lithuania and Cyprus charge 15 percent and Poland 19 percent.
France, Germany and Sweden - countries with corporate tax rates ranging from 35 to 40 percent - fear that companies will shift their investments away from their economies to the East.
So they are keen to see minimal corporate tax levels in the EU.
But Commissioner Almunia acknowledged to l'Echo that many EU countries still oppose such an idea.
He would therefore concentrate his work on setting a standard tax base - meaning an EU-wide harmonisation of assessment methods rather than levels of tax.
"Old" member states such as the UK and Ireland also strongly oppose any moves by the EU to harmonise tax.
As EU decisions on taxes have to be taken by member states unanimously, agreement on the issue seems to be a long way off.
Disagreement within the Commission
But Mr Almunia's comments are a sign that within the Commission, the interest for minimum tax rates is on the increase.
Up until now, the Commission had publicly opposed tax harmonisation, through comments by the responsible Commissioner - Internal Market Commissioner Frits Bolkestein.
Only last Tuesday (29 June) Mr Bolkestein said, "Chancellor (Gerhard) Schröder and French Prime Minister (Jean-Pierre) Raffarin want the Commission to put forward a minimum rate of corporate tax, but I am not going to do that because it is not the right response".
He added, "It is not the task of the European Commission to tell the governments what the level of corporate tax should be".