Cabinet's corporate tax group to meet

A CABINET sub committee for tax is due to meet tomorrow to discuss proposals for major reforms in corporate taxation, but it remained unclear last night whether agreement would be reached. Department of Finance officials are believed to have cautioned that more time is needed to consider the reform proposals, although other Government departments are believed to be pushing for a decision.

On the table is a plan to introduce one main rate of corporate taxation to replace the three current rates. At the moment manufacturers, international service firms and companies in the IFSC pay tax at 10 per cent, while the main corporation tax rate of 36 per cent applies to other firms. A special 28 per cent rate is charged on the first £50,000 of profits as a benefit to smaller services firms.

Because EU approval for the 10 per cent manufacturing rate runs out in 2010 - and for the IFSC rate in 2005 - reform is essential. But Department of Finance officials are arguing for one single rate of around 15 per cent, while the Department of Enterprise and Employment is seeking a 12.5 per cent rate.