Doubt over deal on minimum EU corporate tax

Dutch Finance Minister Mr Gerrit Zalm said today he doubted the European Union would agree on a minimum corporate tax rate by…

Dutch Finance Minister Mr Gerrit Zalm said today he doubted the European Union would agree on a minimum corporate tax rate by the end of this year.

But Mr Zalm, chairman of EU finance ministers' meetings, also said he favoured a minimum corporate tax rate if the EU were to agree on a common method for calculating corporate taxes.

"My personal opinion is that if we would go to some kind of common base, we should have some kind of minimum rate," Mr Zalm told the European Parliament's Economic and Monetary Affairs Committee.

He added that any such minimum would end up being lower than the current average and "the difference between the lowest and the average rate should not be too high".

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The issue of corporate taxes has heated up since the May 1st enlargement of the EU. Several long-standing members of the EU fear low taxes in the new member states will lure away business while these states also benefit from EU structural funds.

Many new member states wish to emulate Ireland's low corporation tax system, which has proven a key factor in the Celtic Tiger era.

Germany and France - among those EU members with the highest corporate tax rates - have called for a harmonisation of corporate taxes, possibly including a minimum rate.

But new EU member states, and the European Commission, have rejected calls for a minimum rate.

Noting that EU members have to agree unanimously on direct taxation issues, Zalm said: "Whether unanimity during the Dutch presidency on minimum rates will be reached, I doubt that very much."