THE GOVERNMENT has asked the European Union to amend its treaties to provide legal assurances that it can continue to control its own corporate tax rate.

The request, which comes against a backdrop of growing calls for greater fiscal union in the EU, reflects Ireland’s concern that it could be forced to raise its ultra-low 12.5 per cent corporate tax rate – a move it says would undermine its competitiveness and ability to attract investment.

In a letter to the EU presidency on September 2nd, the Irish ambassador to the EU asked that a protocol be attached to Europe’s forthcoming Croatian accession treaty ensuring Ireland’s jurisdiction over taxation would not be compromised.

Lucinda Creighton, Ireland’s European affairs minister, said: “Ireland’s 12.5 per cent corporate tax rate has been a cornerstone of our industrial policy, is an integral part of our international brand, and is critical to supporting our economic recovery and employment growth”.

But the request has already prompted debate among other member states.

Earlier this month the UK blocked discussion of the issue at a meeting of EU ambassadors, saying it needed more time to study the proposal.

There are also concerns in Brussels that other member states might demand their own changes.

Due to the lengthy timeframe involved in ratifying a treaty change, EU leaders decided to wait until Croatia was due to join. After Croatia’s accession negotiations concluded in July, Dublin requested the change, which would require all member states to vote on the issue in their national parliaments.

A spokesman for the holder of the EU presidency, Poland, said it had received the request and would continue its efforts on the proposal. – (Copyright The Financial Times Limited 2011)