Brussels dismisses Franco-German tax call

13th May 2004, Comments 0 comments

BRUSSELS, May 13 (AFP) - The European Commission Thursday shot down calls by Germany and France to harmonise corporate tax in the EU to prevent "fiscal dumping" by countries that enjoy lower tax rates.

BRUSSELS, May 13 (AFP) - The European Commission Thursday shot down calls by Germany and France to harmonise corporate tax in the EU to prevent "fiscal dumping" by countries that enjoy lower tax rates.

"The commission has absolutely no intention to present a proposal on
corporate tax rates," a spokesman for tax commissioner Frits Bolkestein told reporters.

"If there is an initiative by France and Germany in this regard, it will not be supported by the commission," Jonathan Todd said, reiterating the backing of Brussels for "fair tax competition" among EU members.

The plan to harmonise corporate tax rates in the newly expanded European Union was expected to figure in talks Thursday between French President Jacques Chirac and German Chancellor Gerhard Schroeder in Paris.

According to officials in Berlin, the two countries will ask the European Commission to draw up a bill aimed at ironing out obstacles to fair competition in the EU caused by varying corporate tax rates.

On the eve of the EU's historic enlargement on May 1, Germany - the EU's paymaster - unleashed an attack on "fiscal dumping" by some of the 10 incoming member states.

"If new member states maintain low tax levels and get infrastructure
financed by the EU, we will have to have a discussion," Schroeder warned then.

In a bid to attract foreign investment, most of the eastern European
countries that joined the EU have very low levels of corporate tax.

Business profits in those countries are often taxed at less than 20
percent, compared with a median 33 percent in the existing EU countries and 39 percent in Germany.

But the European Commission sees no need to intervene to block what it sees as fair competition to attract foreign investment.

Bolkestein is, however, working on proposals to increase transparency in how member states calculate their corporate tax levels, with a view to publishing them by October.

"But there's a world of difference between this and tax rates themselves," Todd said.

©AFP

Subject: French news

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