TaxPersonal TaxUK veto on tax issues under threat from EC president

UK veto on tax issues under threat from EC president

A warning that Britain will have to lose its veto and agree to majority European Council voting on strategic tax issues like the withholding tax has come from Commission President Romano Prodi.

Speaking after Britain left the way clear for action against taxevasion on interest payments short, he madeit clear majority voting was an essential ingredient of the enlargement ofthe EU – which Britain supports.

In the Commons Prime Minister Tony Blair reiterated his veto ona withholding tax, which the UK has long objected to because it may damaging to The City.

But he told MPs: ‘Wewill continue to work for a solution to the issue of tax evasionthat rightly concerns some of our EU partners, Germany inparticular.’

Prodi drew a distinction between taxation affecting the singlemarket and taxes on property and persons: the former involvingunfair competition and the latter remaining the responsibilityof national governments.

And he has signalled his disappointment over the UK’s standagainst the withholding tax during the Helsinki summit.

EU Finance Ministers will now concentrate on tougher rules ondisclosure by banks to tax authorities and a crackdown on taxhavens.

UK falls out with Europe after digging heels in over withholding tax

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