Irish Prime Minister Enda Kenny and French President Nicolas Sarkozy clashed Friday night over Ireland’s corporation tax at the newly-elected Taoiseach’s first EU summit, according to the Irish Independent.

Mr. Kenny was confident of securing a 1 percent reduction in the interest rate on the bailout at the end of the month, but  Sarkozy, as well as German Chancellor Angela Merkel, demanded a change to the corporation tax system in return for the lower interest rate.

Mr. Kenny called the discussion with the French president “good, vigorous and vibrant.”

"I'm not sure whether you would call it a Gallic spat or not but obviously the French President has very clear views about the corporation tax rate for quite some time -- and then, so have I," he said.

The European Commission is set to publish proposals on a common set of rules for the collection of corporation tax across Europe.

Germany and France want to prevent companies from paying a lower rate of corporation tax in Ireland, without having a full operation in the country.

Germany and France are offering to be flexible on the EU-IMF package but only if the government compromises on the corporate tax base.  Mr Kenny is insisting he won't give anything away on the Irish corporation tax -- neither the rate nor the base.

Mr Kenny said a common corporation tax base across the EU "was harmonization of the tax rates by the back door and this would be detrimental to Ireland and to Europe.”