European companies could be operating across EU borders using a common tax base within five years, the man in charge of drawing up the new system says.

Laszlo Kovacs, EU tax commissioner, will tell finance ministers tomorrow that experts are making headway on the ambitious project, which aims to cut the complexity and cost to business of complying with different tax systems. In an interview with the Financial Times, Mr Kovacs says that he hopes to be ready with a legislative proposal in early 2008 and that it could come into force as early as 2011 if member states give it full backing.