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Updated 10.55pm
IRISH COMPANY TAX laws could be set for a huge overhaul after the OECD outlined a string of changes to stop companies shuffling their money into overseas tax havens.
The Paris-based organisation today recommended measures to reduce the mostly-legal tax-avoidance tactics that companies – particularly those in digital industries – were relying on to maximise profits.
It released details for seven elements of an “action plan” to cut down on tax evasion, including a guideline set of tax rules for all countries to use to stop companies exploiting loopholes between different regimes.
One of the loopholes, known as the “Double Irish” arrangement, is a legal tax-avoidance scheme most commonly associated with Google and its local operations.
Don’t fence the digital economy in
The OECD also included plans for dealing with the “tax challenges of the digital economy”, where the sale of “intangibles” – like software or digital media – made it easy for tech giants to shift their profits to wherever they would be liable for the least tax.
But the organisation said there was no point trying to “ring-fence” the sector with special rules as it was quickly becoming the globe’s primary economy.
Instead the organisation recommended introducing rules that would make companies pay tax in any countries they carried out their business or were involved in “value creation”.
Other elements of the plan included:
Today’s release is due to be followed by a second report next year to the G20, the forum for governments from 20 major economies including the EU, and members will then talk about how some or all of the plans will be put into place.
What does all this mean for Ireland?
The OECD’s recommendations would require international agreement to put into place, although tax is one of the key issues on the table when finance ministers meet at the G20 summit in Australia this weekend.
Minister for Finance Michael Noonan today said he welcomed the report and Ireland particularly agreed that digital businesses should not be “ring fenced” from the wider economy.
“Significant progress has also been made in the areas of coherence, substance and transparency and while further work is required in some of these areas, the reports are a further step towards multilateral co-operation on countering base erosion and profit shifting by multinationals,” he said.
In a good place, but don’t go it alone
Grant Thornton tax partner Peter Vale said it looked like big changes to the global tax landscape were inevitable and Ireland was in a good spot to capitalise on any new rules.
“(Ireland’s) combination of a low corporate tax rate, solid infrastructure and supply of a skilled workforce puts us in a strong and arguably unique position to benefit from the expected shifting of the tax goalposts,” he said.
But he warned against the government making any unilateral changes to Irish tax regimes as there was a risk the country would become less competitive in the global marketplace.
First published 2.59pm
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The Greens will be struggling to survive after the madness they have put us through since they got into power.
@Red Line: Can’t you not focus on the subject being discussed instead of taking potshots?
Take your frustration out in the polling booths instead of ruining the comments thread. The destruction of nature threatens our very existence.
@Ollie O’Cleirigh: The Greens are fake environmentalists. For example they approve of mass immigration, no matter of the impact on Ireland’s carbon footprint.
@Ollie O’Cleirigh: public discourse is far more important than voting even though both are important. The greens have set back the green agenda in Ireland for decades with lazy and incompetent political leaders and party members. They constantly commentate on our emissions and come up with no strategy as to how to mitigate them. Not one word from them on nuclear power and investment in our grid which cannot even connect new wind farms as its totally ineffective and at its capacity already. Then when asked about public they talk about hydrogen trains when electric trains would transform the islands public transport. Bicycle lanes painted on the side of roads and south facing window boxes. They are done. Get them out. Impoverishing the poor further particularly rurally will not help.
@Allora: 100%. There a bunch of amateur politicians that got lucky in the last election.
Malcom why is your so called Green party destroying wildlife habitats ,biodiversity killing trees wasting millions of taxpayers money at Lough Funshinagh flood crisis causing the demolition and flooding of homes farmyards and villages in a National housing crisis !! By not allowing the lake return to its natural level!!! Is there a hidden agenda ?
Well said Malcolm. Green policies are becoming accepted in most governments and we need a brave voice.
Just how committed is the government to preserving what’s left of our biodiversity? It allows coursing clubs to capture thousands of our native hares, supposedly a protected species, for the purpose of setting dogs on them. If that can happen to an iconic species that conservationists have dubbed the “Flagship of Irish biodiversity”, then how serious can our leaders be about saving our wildlife heritage? The image of a hare having its bones crushed or being tossed into the air by a coursing dog could aptly represent the attitude of this government to the wild creatures that share the island with us.
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