SETTING A minimum corporate tax rate across euro zone member states is among the draft proposals France is seeking to include in a forthcoming economic reform package for the bloc.
Discussions are taking place between French and German officials on joint proposals the two countries hope to agree by the end of March. French finance minister Christine Lagarde said the proposals would focus on better economic policy co-ordination, competitiveness and reforming the €440 billion European Financial Stability Facility (EFSF).
“It is at the March summit that we will propose what we call the ‘global package’, which includes a certain number of elements including reinforced competitiveness . . . and a better convergence of economic policies,” she said.French president Nicolas Sarkozy, who has criticised Ireland’s comparatively low corporate tax rate of 12.5 per cent, and is understood to favour the introduction of a minimum rate across the euro zone.
Asked whether corporate tax was under discussion between France and Germany, Ms Lagarde stopped short of calling for a common rate but said better harmonisation of tax bases and rates would lead to a more “level playing field”.
She described corporate tax convergence as l'arlésienne, a literary reference that suggests something everyone discusses but which never appears. "We have been trying for a long time, [but] a certain number of countries – I'm thinking notably of Ireland but also Luxembourg and other countries – do not have the burning desire to get involved in this convergence."
However, Ms Lagarde said the real difference between corporate tax rates across the EU was smaller than commonly believed.
“One cannot just say, ‘Ireland is at 12.5 per cent and we are at 25 per cent on average, so it’s not good.’ One must go a little further and look at what is the tax take from companies under the corporate tax heading.”
At 33 per cent, the nominal corporate tax rate in France is the highest in Europe after that of Malta. But companies with more than 2,000 employees only pay a rate of 13 per cent.