It has been suggested this week that France and Germany are planning to push forward plans for a minimum corporation tax rate across Europe, which some fear would result in higher taxes on British firms.
European officials are rumoured to be about to debate plans to set a European-wide floor on corporation tax in a bid to clamp down on tax havens such as Ireland and Luxembourg, which is a direct challenge to Prime Minister David Cameron who is calling for sovereignty to be returned to EU members.
In fact, a Downing Street spokesman said that the Government has a long-standing view on tax harmonisation, which is not to support it, and added that the UK would veto any proposals that see it surrendering power over tax rates to Brussels.
The news has emerged as the new Government is planning to make good on its pre-election promise to re-negotiate the terms of the UK’s membership of the EU and campaigners says that the proposals highlight the scale of the challenge Mr Cameron faces in this regard. As one put it, the news suggests “there are those at the heart of the Eurozone who want more power over Britain, not less.”
Later today (May 27), EU officials will discuss how to tackle tax avoidance and create a system of “fair, transparent and growth friendly” corporation taxation. The discussion will “feed into” an announcement on corporation tax next month and will include plans to create a basic rate of corporation tax across Europe.
The UK has the lowest corporation tax rate in the G7, at 20 per cent, while Ireland, the base of many international tech companies, has a 12.5 per cent rate. France and Germany, however, both have rates above 30 per cent.