Letter to the Editor of the FT - 'European Corporate Tax Plans Under Fire'
Sir, Vanessa Houlder and Nikki Tait's article 'European corporate tax plans under fire', 7 February 2011, acknowledges the very real concerns felt by some European governments concerning EU proposals to enforce a common consolidated corporate tax base (CCCTB).
What it doesn't appear to stress is the very real possibility that such a plan would kill off the ability of European nations, big and small, to compete on a level playing field for inward investment. A common European tax rate would allow the industrial giants of Europe to dominate at the expense of peripheral European economies which have employed competitive corporate tax rates at their own discretion to encourage investment, stimulate local employment and economic growth. Central and Eastern European economies which have enjoyed success as low cost manufacturing bases will also lose out under this plan as multinationals will see less benefit in investing here if subject to the same tax rates as everywhere else in Europe.
The upshot of these proposals is likely to be that Europe will lose out altogether, as multinationals seek competitive tax rates outside the European Union, turning to economies such as Singapore, which can deliver these benefits.
Frederic Donnedieu, Chairman, Taxand
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