Irish minister warned tax plans at odds with EU

Ireland’s newly installed finance minister Brian Lenihan has been briefed by senior civil servants, warning his government’s proposals for a common corporation tax base and the removal of the zero VAT rate on children’s clothes and shoes are at odds with ‘EU’s agenda’.

Ireland’s corporation tax of 12.5% has been cited as the chief reason for the country’s attraction as a tax base for many multinationals. Other governments believe the rate distorts the EU market, The Times reports.

Irish officials expect the European commission to make a proposal on the issue later this year when France takes over the EC presidency. A briefing memo says Ireland is ‘also under pressure to change various elements of our tax code in relation to which they argue we are infringing either treaty or directive provisions’.

In addition to concern about corporation tax and VAT, the briefing memo details other important issues such as declining tax revenues and ‘emerging spending pressures’ in health, education and welfare.

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