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Should all EU states align their corporate tax rates?

Should all EU states align their corporate tax rates?

Contractor accountants in the UK and Ireland are bitterly opposed to a legally binding EU-wide tax rate, but the prospect of such an event is moving closer.

France and Germany have now announced that they will align corporate tax rates by next year. The announcement supports the Euro Plus Pact treaty, which outlined the regulations for fiscal and economic co-ordination. The UK, Czech Republic, Hungary and Sweden all refused to sign up for the treaty.

Germany and France intend to unify their tax rates ahead of the Common Consolidated Corporate Tax Base, an aligned rate for all EU member states.

Britain does not support the idea of a CCCTB and believes it to be a precursor to pan-EU tax rates. Countries that have low business tax regimes, such as Sweden and Ireland, are vehemently opposed to the idea of harmonisation.

Richard Asquith, the TMF Group’s head of tax, said Germany and France have been pushed into going it alone due to the reluctance of those countries with low corporation tax. The UK was always going to be opposed to the idea but this could lead to a potential division between the core EU countries and Ireland. Ireland already has a risky debt position and this split will pile on more pressure.

It’s easy to see why the UK is against a uniform EU tax rate. The government is keen to promote the UK as a nation with business-friendly rates of taxation. That would no longer be applicable if all member states were legally bound to levy the same rates.

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Image: day 1 – ducks… in a row! by bschmove

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