Ciarán Cuffe
Question:122 Mr. Cuffe asked the Minister for Finance his views on whether there are areas of tax convergence which can and will happen within the European Union; and if he will make a statement on the matter. [29978/04]
View answerTuesday, 23 November 2004
Questions (79)
Written answers
It is not clear what the Deputy has in mind by the reference to "tax convergence". However, if by tax convergence the Deputy means the Commission's proposals for a common consolidated tax base or the harmonisation of rates, then Ireland is opposed to such developments. It is Ireland's position that each member state must be in a position to decide for itself the appropriate structure of its own tax system, bearing in mind the need to ensure that member states do not introduce unfair tax practices.
However, Ireland is happy to address tax matters at the EU level once the actions are appropriate, are targeted at clearly identified barriers to the workings of the Internal Market and are agreed by unanimity when they come before Council for decision.
In this regard, work is ongoing on a number of tax dossiers in both the direct and indirect tax area at EU level. For example, there is a proposal to amend the mergers directive to aid business to operate more effectively cross border and I understand that this is well advanced. Likewise, the recently agreed interest and royalties directive and the proposal to amend the parent and subsidiary directive are designed to facilitate the improvement of the internal market.
In relation to indirect taxation and VAT, the EU sixth VAT directive provides a Union framework for the harmonisation of the VAT laws of member states to provide for a uniform basis of assessment for VAT. Work in this area is ongoing in the context of the European Commission VAT modernisation strategy. The strategy is designed to meet the needs of the Internal Market and of the changing environment within which the VAT system operates. Examples of this changing environment include the increase in cross-border trade, the emergence of e-commerce and the substantial growth in the supply of services across the Internet to businesses and private consumers.
The EU VAT directive provides for the application by member states of a standard rate of VAT, which may not be less than 15%, and a common band for reduced VAT rates between 5% and 15%, applying to specified categories of goods and services.
In the area of excise taxation, Council directives provide for a community framework for the taxation of energy products and electricity, tobacco products, alcohol and alcoholic beverages.
These directives set down common definitions and classifications for the various product groups, the rules for calculating the tax, and the criteria under which relief from tax may be granted. Minimum rates of taxation for the products are also stipulated. The minimum rates are reviewed in Council from time to time.