Governor's dilemma over banking crisis
IBRC employees in the North and Britain are protected by the battery of employment rights that apply to workers in most EU countries. As the legislation passed last week does not apply in either jurisdiction, the State may also end up having to compensate these people for the loss of both their jobs and observe rights such as minimum notice etc.
The fact that IBRC operations in Britain and the North are still there, twisting in the wind, begs the question of what precisely the Government, their ultimate owner, intends to do with them. Why were they not placed in liquidation at the same time as the Republic-based parent?
Organising this would have been straightforward – there’s only one real shareholder – and such a move looks inevitable in the near term in any case.
Presumably last week’s priority was dealing with the situation in the Republic. As a result, there should be a few more unforeseen consequences from whole affair.
Sugar taxes leave bitter taste
The UK-based development agency ActionAid is among those in that jurisdiction that have been turning up the heat on the issue of tax avoidance, often drawing unwelcome attention to the role Ireland plays in multinational taxation structures.
The latest episode in the ongoing story involves Associated British Foods’ African sugar subsidiary, Illovo Sugar, and, in particular, the amount of tax that Illovo pays in Zambia.
According to ActionAid, Ireland plays a “pivotal” role in the structures Illovo uses to reduce its Zambian tax bill.
All of which is most unfortunate as Zambia is one of Ireland’s nine long-term development partners – countries that the State is targeting for its development budget. Ireland has had an embassy in the capital Lusaka since 1980.
Indeed, it would appear it was Ireland’s efforts to assist the African nation that, at least in part, lie behind the presence here of Illovo Sugar Ireland, a company that ActionAid says helps the ABF subsidiary escape Zambian taxes.
The African country operates a 20 per cent withholding tax but a 1971 tax treaty between Ireland and Zambia includes a provision that prevents Zambia imposing the tax on money going to Ireland.
The original objective of the provision, ActionAid believes, may have been to encourage investment from Ireland into Zambia, but it is now being used for an entirely different reason.
The ActionAid report on the Zambian sugar company, which is part of the South African Illovo group, estimates that, since 2007, the arrangement involving the Irish subsidiary may have deprived the Zambian exchequer of €1 for every €14 it has received from Ireland in aid. The report can be read at iti.ms/WeSkrw.
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