Controversial single EU tax base to be put on ice

Plans to push forward a common consolidated corporate tax base are to be put on the back burner by France when it takes up its presidency next month.

The announcement follows Ireland’s vote to reject the Lisbon Treaty and is being interpreted as signalling to the Irish that the EU is not intent on encroaching on sovereignty.

‘It is on the agenda but we are not pushing it. It is alive, but not kicking very much,’ Christine Lagarde, France’s finance minister, told the Financial Times.

Lagarde’s comments in April that France would put tax base harmonisation on its agenda later this year worried Ireland, which has been a strong opponent of plans to harmonise the way corporate tax is calculated. Like the UK it feared that it would lead to harmonised tax rates.

She also said that France wanted to push for a cut in VAT rates for labour-intesive services, including restaurants and hotels, and on energy-efficient products.

It also plans to table an amendment for a mechanism to reduce VAT on fuel when oil prices risk triggering ‘social unrest’.