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France Puts Common Tax Base Plans On Hold Following Irish Vote

by Ulrika Lomas, Tax-News.com, Brussels Friday, June 20, 2008

French Finance Minister Christine Lagarde revealed ahead of Thursday's summit of EU leaders that plans to forge ahead with a common corporate tax base have been shelved in the wake of Ireland's rejection of the Lisbon Treaty - although EU Tax Commissioner Laszlo Kovacs has other ideas.

Lagarde told the Financial Times in an interview published on 19th June that while the proposal for a common consolidated corporate tax base (CCCTB) had not been abandoned, France would not urge other EU member states to back it over the course of its six-month presidency of the bloc, which begins in July.

"It is on the agenda, but we are not pushing it," she told the FT.

France would nevertheless seek agreement on other tax questions, such as reducing value-added tax on services such as restaurants, hotels and energy-efficient products, she revealed.

Lagarde's recent remarks are in stark contrast to comments she made in April this year, when she told reporters following a European Commission tax forum that the CCCTB was an idea that the French were "determined to push".

But her about-turn is perhaps an indication of how much the EU political landscape has changed as a result of the Irish rejection of the Lisbon Treaty, largely on fears of an erosion in tax sovereignty.

The European Commission had delayed the presentation of an impact assessment of the CCCTB proposal until after the Irish referendum. However, Tax Commissioner Laszlo Kovacs has insisted that the Irish vote has no bearing on these plans, which he intends to present later this year regardless.

"It will be during the French presidency of the EU," Kovacs told Reuters.

"There is no reason to change our plans concerning tax policy initiatives. The CCCTB is in the pipeline," he added.

Kovacs said that member states would retain their veto on tax proposals under the Lisbon Treaty, and reportedly accused those that campaigned for 'No' vote with slogans that Ireland will lose tax sovereignty of "simply telling lies".

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