March 21, 2011 / 9:25 AM / 9 years ago

Irish government eyes concessions on EU tax rules - report

DUBLIN (Reuters) - Ireland is considering giving ground on new corporate tax rules in exchange for a cut to the interest rate it pays on an 85 billion euro bailout at key euro zone talks this week, the Irish Times reported on Monday.

Ireland's Prime Minister Enda Kenny holds a news conference after an Euro zone leaders summit in Brussels March 12, 2011. REUTERS/Eric Vidal

Prime Minister Enda Kenny earlier this month rebuffed demands by euro zone leaders to compromise on the country’s low corporate tax regime, which euro zone partners have described as unfair competition for foreign investment.

An increase in the country’s headline 12.5 percent tax rate, widely seen by the public as the foundation stone of Ireland’s large multinational sector, is still off the table.

But the Irish Times on Monday cited ministers as saying that the government was reluctantly considering offering to consider new EU rules about how corporate taxes are calculated, the Common Consolidated Corporate Tax Base (CCCTB).

Ireland may also offer to introduce legal limits to budget deficits, the report said.

During talks in Brussels earlier this month, Kenny ruled out engagement on CCCTB, describing it as “the harmonisation of the tax rates by the back door.”

But amid growing concern about the state of Ireland’s public finances his government’s opposition to new rules appears to have softened in recent days.

Deputy finance minister Brian Hayes on Sunday refused to rule out a concession on the CCCTB. “We will look at all these things in the round,” he told state broadcaster RTE on Sunday.

Analysts say the new tax rules would be detrimental to Ireland by spreading the tax take across all the EU countries where a multinational has operations, making it harder to channel them all through an Ireland-based head office.

But several other countries have also criticized the rules, which would allow companies to opt out and would take several years to come into effect.

The opposition Fianna Fail Party on Monday said it would bring a motion in parliament to block the government from giving any ground on the CCCTB.

Writing by Conor Humphries; Editing by Toby Chopra

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