http://blogs.birminghampost.net/business/

EU "Rules" - OK?

By Carol Barrie on Oct 28, 08 11:10 AM in Tax

Much has been said in the recent press about the need for the UK to bring its tax system in line with EU Law.

The UK is under pressure to ensure that dividends from companies in other EU states attract the same advantageous tax treatment as dividends between UK companies. At the same time, much is also being made of the number of UK companies who are departing these shores for Ireland, to benefit from Ireland's 12.5% Corporation Tax rate.

This is interesting given that it is anticipated that the EU Commission will bring forward a proposal for a common corporate tax rate in the second half of 2008 during the French EU Presidency.

France of course supports the concept of a "common corporation tax" but they are aware that a number of member states have reservations about the proposals.

Is this surprising, given the substantial benefit that Ireland is currently enjoying?


While very few countries will willingly accept interference in their domestic taxation affairs, it is clear that the current Irish rate is putting severe pressure on other European countries to bring down their headline rates if they are to have any hope of competing with Ireland for international business!

Whilst not blaming Ireland at all for looking after their own domestic tax take; it seems slightly odd that the UK has to reduce its tax take on dividends from overseas countries so as not to inhibit free movement of businesses across the EU while Ireland can bring their domestic corporation tax rate right down to attract business from the rest of the EU.

Ireland has just announced a .5% increase in the standard rate of VAT to deal with a "severe fiscal shortfall". The VAT increases are also to be accompanied by other direct tax increases. Presumably if they are forced to put up their domestic rate of tax considerably, the potential exodus of multi-national companies could force further tax rises.

I shall be watching the developments with great interest!

Business authors

David Bailey

David Bailey - Prof David Bailey, Coventry University Business School
My postings | David Bailey's RSS feed My feed

Stuart Pemble

Stuart Pemble - Construction Lawyer, Mills & Reeve
My postings | Stuart Pemble's RSS feed My feed

John Clancy

John Clancy - Birmingham City Councillor and director of mediafuturesalert.com and justliteracy.com
My postings | John Clancy's RSS feed My feed

John Samuels

John Samuels - Professor of Business Finance, Birmingham Business School
My postings | John Samuels's RSS feed My feed

Chris Tomlinson

Chris Tomlinson - Chris Tomlinson is the founder of social media and online PR agency Friend (frienddigital.com)
My postings | Chris Tomlinson's RSS feed My feed

Andrew Whitehead

Andrew Whitehead - Senior partner at law firm SGH Martineau, leading the firm's Energy & Climate Change practice.
My postings | Andrew Whitehead's RSS feed My feed

Keith Gabriel

Keith Gabriel - A Birmingham-based PR Account Manager
My postings | Keith Gabriel's RSS feed My feed

Beverley Nielsen

Beverley Nielsen - Lecturer, Design Management, at the Birmingham Institute of Art & Design, BCU
My postings  | Beverley Nielsen'a RSS feed My feed

Mike Loftus

Mike Loftus - Director of News from the Future Ltd. Writing on the trials of setting up your own business
My postings | Mike Loftus's RSS feed My feed

Richard Halstead

Richard Halstead - Midlands region director for EEF, the manufacturers organisation.
My postings | Richard Halstead's RSS feed My feed

Karl Edge

Karl Edge - partner at KPMG in Birmingham, specialising in automotive, manufacturing and house building sectors.
My postings | Karl Edge's RSS feed My feed

Peter Owen

Peter Owen - Managing director for construction firm Willmott Dixon Midlands.
My postings | Peter Owen's RSS feed My feed

Doug Mahoney

Doug Mahoney - International Trade Director at UK Trade & Investment in the West Midlands.
My postings | Doug Mahoney's RSS feed My feed

Dr Steven McCabe

Dr Steven McCabe - director of research degrees for Birmingham City Business School.
My postings | Dr Steven McCabe's RSS feed My feed

Francis Greene

Francis Greene - Professor of Small Business and Entrepreneurship, at the University of Birmingham.
My postings

Alan Gilmour

Alan Gilmour - Director at Cogent Elliott, experienced in marketing, brand development and customer relationship management.
My postings

Latest Birmingham Post Lifestyle blog

Lifestyle Blog

Birmingham Post staff and guest bloggers from the midlands give you the lowdown on what's happening in your region and some musings on culture in the UK and beyond.

Latest Birmingham Post Science blog

Latest Birmingham Post Sport blog

News Blog

Birmingham Post staff and guest bloggers from Birmingham and the midlands inform and entertain on all sporting matters.

Keep up to date

Sponsored Links