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Europe Daily Bulletin No. 8401
Contents Publication in full By article 15 / 39
GENERAL NEWS / (eu) eu/state aid

Mario Monti believes that corporate tax in Belgium, Netherlands and Ireland does not conform with European rules

Brussels, 14/02/2003 (Agence Europe) - Next week Mario Monti, the European Commissioner in charge of competition and inspecting State Aid, will recommend (during a meeting of the College of Commissioners) that the investigations into the corporate tax systems in Belgium, Netherlands and Ireland are brought to a conclusion by a negative decision. These investigations have formed part of a larger examination launched in 2001 into several systems in eight Member States. These systems allow for tax breaks for multinationals that set up in special "fiscal centres" in a country. Commissioner Monti's services consider that the systems in force in the three Member States in question are illegal with regard to European rules on State Aid. In 1984, the Commission authorised the Belgium's co-ordinating centre, which now do not respect the rules of the current regulatory system. The Dutch International Financing Activities Scheme was also ruled illegal but beneficiaries could rightly think that the measures that they enjoyed were authorised. Mr Monti is therefore in favour of phasing out these systems in order to allow Member States to replace them. It is recommended that the Irish Foreign Income Scheme, which works according to a licence system, should not be granted any more licences, while existing licenses will be phased out over a transition period. This compromise is necessary because the "Commission is obliged to safeguard the legitimate confidence of the beneficiaries and those who would be protected, stressed spokesman, Tilman Lueder. Mr Monti who has been participating on the 14 February in the European Competition Day" in Athens explained that he had met leaders from the countries concerned and expressed his satisfaction about the content of the meetings. Belgium, the Netherlands and Ireland recognise, in effect, the non-compliance of their fiscal systems with current rules and are committed to getting rid of them by 2010, before a decision is definitively taken next week. Mr Monti stressed that these decisions are part of the ambitious programme lunched in 1997 on his initiative for stricter controls of corporate tax systems. He also strongly denied assertions that the compromise that had been envisaged was he result of political pressures from the Member States in question, "I can categorically say that the opposite is true! The Commission exerted remarkable pressure on Member States …I am happy today that the political agreement on the fiscal package is on the point of being formalised…I believe that the fact that assurances are provided for these three Member States in the conclusion of these proceedings is part of an overall political initiative that will reduce quite remarkably unfair competition in tax matters". On 22 January the Council of Ministers reached a political agreement on tax harmonisation, which should be definitely adopted in March.

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