Nora Owen
Ceist:109 Mrs. Owen asked the Minister for Finance the assurances, if any, he has received from the EU Commission regarding corporation tax rates in Ireland; and his views regarding future rates of corporation tax. [18388/97]
Written Answers - Corporation Tax.
The Deputy will recall that in May of this year the previous Government announced plans to replace the current corporation tax regime with a single 12.5 per cent rate of corporation tax for trading profits and a higher 25 per cent rate for non-trading profits. Under this decision, the 12.5 per cent rate would apply from the year 2006 to all trading activities, apart from manufacturing and certain activities currently qualifying for the 10 per cent rate of corporation tax. These latter activities would be subject to the 12.5 per cent rate from the year 2011.
As has been the practice with previous decisions in relation to the 10 per cent corporation tax rate, the Commission was informed of the Government decision shortly after its announcement in May. This was followed up by a series of briefings with officials of the Competition Directorate of the Commission (DG IV), which is responsible for the implementation of EU State Aid rules. In the light of the discussions which have taken place to date, I am satisfied the Commission does not have a difficulty from a State Aids viewpoint with the proposal to introduce a common low rate of corporation tax for all sectors of the economy. The Commission has sought clarification on various aspects of the proposed changeover and this is the subject matter of the present discussions. However, the particular rate of corporation tax is not an issue in these ongoing discussions.
As for what the ultimate rate of corporation tax will be — that is, whether it will be 12.5 per cent or 10 per cent — the position is, as I have already stated, that this will be decided on by the Government in due course and an announcement will be made in the budget.