Mr. Pierre Moscovici:

I thank the Chairman and honourable members. It is a pleasure for me to be here again. I was here a few years ago as finance Minister of my home country, France. Let me begin by offering my thanks for this invitation to discuss the latest developments in the EU corporate tax policy.

Since this Commission took office just over two years ago, we have been working hard to build a fairer, more effective and more competitive taxation framework across Europe. We have been building a new and robust tax transparency framework, with increased openness and information exchange between tax authorities, which is the main option of the global standards in that field. We have agreed binding anti-abuse rules so that countries can better protect their tax bases in response to aggressive tax planning. We have a new EU strategy to promote international tax good governance and to tackle external threats of base erosion and with the common consolidated corporate tax base, CCCTB, we have proposed a major overhaul of corporate taxation to safeguard and strengthen our Internal Market.

We have received the Irish Parliament's negative reasoned opinion on this proposal and I will try to address its concerns ahead of our formal reply in the coming weeks. Furthermore, all of the OECD anti-base erosion and profit shifting measures adopted at global level are now covered at EU level. This is a significant step forward and essential for our international credibility. It is evidence that member states can deliver on their global commitments and also crucial for the strength and coherence of the Single Market.

Each of the initiatives focuses on the twin goals of boosting competitiveness and increasing fairness. It is about competitiveness and justice. Through our transparency rules and anti-abuse provisions we are working to create the level playing field businesses need and for which they asked. For example, our action on the resolution of double taxation disputes responds to the needs of cross-border businesses in the way national measures simply cannot do. By co-ordinating national approaches, we are working to prevent legal clashes, cut administrative burdens and remove tax obstacles for businesses in the Single Market. In short, we are working to create a simpler, fairer and more stable tax environment for companies and member states.

I am pleased to say Ireland has actively contributed to the new EU tax agenda, with a valuable input at each stage on each proposal. It is cautious, as it is supposed to be, on EU proposals in the area of taxation. The Irish have always been fair and constructive negotiators and their contribution to shaping EU policy is valued and appreciated. It is something I experienced directly, having working with the Minister for Finance, Deputy Michael Noonan, for almost five years, first as colleagues as economic and finance Ministers and now in my role as Commissioner.

I say clearly and firmly that the European Commission fully respects Ireland's sovereignty in this policy area. This sovereignty is protected by the treaties and reinforced by the unanimity rule. There is, therefore, no cause for concern on this front. There will not be any threat or attack against Irish tax sovereignty. I argue the contrary, that EU co-ordination on tax matters reinforces rather than threatens national sovereignty. It means that countries can effectively apply their chosen tax rates without being undermined by their neighbours' activities. It prevents companies from exploiting national mismatches to avoid tax and blowing a hole in public finances.

I advocate for co-ordination because it means that governments have a clear legal environment in which to develop their national policies. It puts an end to tensions between national systems which often discourage companies from investing across borders in the Single Market. It also means that member states have strength in numbers when defending their common interests on the international stage. In the absence of such co-ordination in practice, it is not for national governments to decide who pays how much tax but for the biggest multinationals and wealthiest individuals. Unsurprisingly, most of the time they prefer others to pay tax such as workers, pensioners and smaller businesses.

All of this is key when it comes to the common consolidated corporate tax base, CCCTB.

I would like to focus on how we have improved the CCCTB and transformed it into a modern, forward-looking initiative that fully delivers on two priorities, those being, growth and fairness. A previous proposal did not succeed and we understood that there was a need for change. The same causes would produce the same effects. This is a new and improved proposal.

The new CCCTB will be good for growth because, by anchoring business investment and expansion in our Single Market, it will have a positive economic impact on all member states, including Ireland. All of the proposal's original benefits remain, including simplicity, reduced costs, legal certainty and the possibility of loss offset. We have introduced new incentives to reward companies that invest in innovation, a new super deduction of up to 150% will be available to companies investing in research and development and extra support of up to 200% will be given to young, innovative firms and start-ups that are drivers of growth and jobs. The new CCCTB will help businesses to expand without taking on excessive debt.

The allowance for growth and investment addresses the debt bias in taxation by rewarding companies that increase their regulatory bases for financing. This incentive is particularly important for small firms, which struggle to secure loans. The CCCTB will enable them to explore more diverse sources of funding and follow a more secure path to expansion.

The new CCCTB will be good for fairness because it is designed to be mandatory for the largest multinationals, which was not the case with the previous proposal. They will all be subject to the same corporate tax rules, which is the best way to block tax avoidance and deliver fair taxation. Other companies will be able to opt in if they wish, and I expect that many will, given the proposal's benefits. The rate that will apply to the companies subject to the CCCTB will remain a national priority. There is no question, no threat, no issue. The Commission is not going to propose anything that would impact on Ireland's national sovereignty. If the tax rate of 12.5% has to be changed, that will be up to the Irish Government and Parliament. It will not be on the initiative of the Commission. I gave warranties on that previously and will repeat them today. There must not be a false debate or false worries.

Members may ask what is in the proposal for Ireland. I believe that Ireland has much to gain from the CCCTB, especially given today's economic and political climate. First, the CCCTB will bring EU-wide economic benefits. Once it is in place, we expect a 1.2% rise in growth rates and nearly €19 billion in extra investment across Europe. That is good news for all countries.

Second, the CCCTB has much to offer Ireland specifically. As a dynamic and open economy in addition to being a gateway to the Single Market for many large companies, Ireland will also be able to offer smaller businesses a simple and stable tax system that applies to the entire EU. Ireland will be able to ensure that companies can enjoy a long-term, sustainable tax framework that fits their businesses and needs. These benefits, combined with Ireland's 12.5% corporate tax rate, can make this country an even more appealing investment location.

Third, Irish businesses that want to operate across borders will face fewer costs, less red tape and greater rewards for their innovative activities.

This gives an important boost to domestic companies.

I know that Ireland's primary concern lies in the second step of the process, namely, the consolidation and apportionment formula. The proposal is designed in such a way that the full benefits of CCCTB will only come through when both the common base and consolidation are implemented. Businesses have called for consolidation. We see this as a vital tool for completing this simple, fair and effective tax framework. Even if the two-step approach of common base followed by consolidated is taken the proposal will remain a three Cs proposal. What is on the table at this stage is the Commission proposal. I insist on it being called "a proposal". This means that it is a starting point for negotiations. Proposals are not decisions. They can always be improved during the legislative process, responsibility for which lies with the member states. The Commission believes in issuing proposals. I will defend this proposal strongly because I firmly believe it is good for all member states for the reasons I have set out.

There is no denying that consolidation is complex. I know that intense discussions will be needed to reach a final deal. I am aware that Ireland will use its voice actively and, I trust, constructively to help shape consolidation in a way that works for everyone. All voices are equal. I am sometimes asked if there are big countries and small countries inside the EU. That is certainly not the case, especially in the field of EU tax policy where no member state can be over-ruled. There must be unanimity. In other words, all members states, without the exclusion of any country, must agree. The committee can be assured that there will not be a CCCTB if Ireland does not want it. This means I will have to work on compromises, in respect of which I will work constructively with the Irish Government and its Parliament. Ireland has done a lot to reform its corporate tax system and to show that it is committed to fair taxation. It has also been an active contributor to the EU agenda. I urge it to continue to do so in the spirit of consultative co-operation, which was the spirit of my last meeting with the Minister for Finance, Deputy Noonan, last Friday in Davos. We will meet again at the end of the week in the framework of the Eurogroup and ECOFIN.

Ireland's success, growth and competitiveness boosts the Union as a whole and reciprocally, a fairer, stronger, more competitive EU makes Ireland stronger too. I know that Ireland is pro-European, which, to me, is right. I look forward to hearing members views and comments and to discussing with them what the EU can do to further support the needs of Irish businesses and the Irish people, because all this is done in order to create jobs and a better life for our EU and Irish citizens.