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
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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