In a speech to an International Tax Symposium entitled “Dynamics of International Tax Competition: Opportunity or Threat” in Zurich on 21 October last, Mr Kovacs suggested that there was competition between EU countries in the corporate tax area, and that this competition could be harmful. He also suggested that an overall high tax burden might not necessarily be a deterrent to productive investment.

The Commission now aims to introduce legislation aimed at achieving a common tax base in EU member states within the next three to four years. The Commission is also seeking to adapt a common approach to counter “transfer pricing”, a mechanism whereby multinational businesses seek to locate the bulk of their profits in low tax regimes.