September 14, 2017 / 11:07 AM / a year ago

Ireland says to resist Junker plan to prevent vetoes on EU tax reform

DUBLIN (Reuters) - Ireland will resist any attempt to strip it of its veto over European Union tax policy, Finance Minister Paschal Donohoe said on Thursday, after the European Commission’s head suggested tax changes be made by “qualified majority”.

Irish and European Union flags are pictured outside the European Commission headquarters in Brussels, Belgium, February 23, 2017. REUTERS/Francois Lenoir

Ireland has a decades-old policy of attracting jobs from some of the world’s largest multinational firms with a corporate tax rate of just 12.5 percent and has long resisted moves to harmonise national rules on tax across the 28-country bloc.

In a speech on Wednesday, Jean-Claude Juncker urged EU states to make the change, saying the current practice of unanimous decisions had blocked major overhauls of tax legislation.

“I and this government will not participate in any decision that changes our ability to protect our national interest on key issues like that,” Donohoe told Irish broadcaster RTE. “The need for unanimity... is a core issue of how the European Union manages issues like this.”

Major reform of how multinational companies are taxed, such as those championed by Junker “would be a very very big economic challenge for Ireland,” Donohoe added.

Donohoe has raised similar resistance to proposals looking at introducing higher taxes on digital mulitinationals such as Google (GOOGL.O) and Amazon (AMZN.O), which stand accused of paying too little tax in Europe.

Estonia, which holds the rotating EU presidency, is proposing an overall reform of corporate taxation that would tax internet companies in the EU states where they make profits, regardless of their tax residence.

The plan will be discussed by EU finance ministers on Friday when Donohoe will argue that the Organisation for Economic Co-operation and Development (OECD), which has been leading efforts on curbing international tax evasion and avoidance, should be left to shape proposals on digital tax reform.

“We believe that the appropriate mechanism for change in relation to international taxation is the work that the OECD have done and are currently engaged in in their review of digital taxation,” Donohoe told reporters on Tuesday.

“Of course we’re open to discussion but we’re also standing by a tax model in relation to international investment that’s competitive, that’s been acknowledged to be transparent and is an important part of how we collect taxes in our economy.”

Reporting by Conor Humphries and Padraic Halpin; Editing by John Stonestreet and Gareth Jones

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