European Commission legislation aimed at neutralising the benefits of Ireland's low 12.5% corporation tax regime will be published just days after the 11 March general election, the Sunday Tribune has learned.
A spokeswoman for the commission said the draft law proposing the establishment of a so-called Common Consolidated Corporate Tax Base (CCCTB) between EU nations was on target to be published in the middle of March.
The harmonised tax plan, which has for many years been driven by the French and German governments, would allow EU countries to band together to agree a common company tax rate among themselves.
But, crucially, the tax would be raised on the basis of where companies generated their sales and less on the national location of their EU head offices.
The plans would favour larger European countries and undermine the attraction of low company taxes, primarily in the Republic.
President Sarkozy vehemently spoke out against Ireland's low corporation tax earlier this month.
John Hume of Hume Brophy Consultants in Brussels, which has for many years monitored the technical preparations
being carried out by the CCCTB working group, said Paris and Berlin believe smaller eastern European countries frightened by the economic crisis will not now oppose their plans.
"There are a number of member states which were opposing it and whom Ireland could have relied upon for support but who are now either politically or economically weakened. And Ireland's negotiating power has been seriously diminished by the financial crisis," he said.
"When we started monitoring the proposals three years ago there would have been no consensus around the table. There was this facility that countries could go off and develop a harmonised tax rate among themselves, while others would be outside the bloc. Now, I would say that the CCCTB bloc would be very, very big because there are EU countries which can see no purpose in being outside. The opposition has dwindled."
Hume said the March legislation could be adopted by the EC within 18 or 24 months. Implementation would take longer.
"This is all being driven by Paris and Berlin. We will be allowed to keep our 12.5% but only for sales in Ireland, and there will be little benefit from that," he said.
The Sunday Tribune first reported last April that the EC planned to advance its CCCTB as a priority.