Ireland a ‘prolific source of tax loopholes’, says transparency watchdog

Swiss top ‘secrecy index’ where, despite criticisms, Ireland is among the better states surveyed

A branch of Swiss bank UBS in  Zurich. Despite pressure on Swiss banks to disclose fiscal and customer data to the EU and US, the TJN report described the concessions as “limited”. Photograph: Arnd Wiegmann/Reuters

A branch of Swiss bank UBS in Zurich. Despite pressure on Swiss banks to disclose fiscal and customer data to the EU and US, the TJN report described the concessions as “limited”. Photograph: Arnd Wiegmann/Reuters

Fri, Nov 8, 2013, 01:00

Claims that Ireland’s effective corporate tax rate is close to the 12.5 per cent headline rate is “fiction”, according to an international tax lobby group.

The Tax Justice Network (TJN) described Ireland in a report yesterday as a “prolific source of tax loopholes” and, summarising recent writings on its financial sector, described it as a “financially captured state . . . where politically networked private insiders effectively write the laws with little or no democratic consultation”.

Claims that the effective and headline tax rates are similar, the report noted, is a “fictional result based on a theoretical ‘standard firm with 60 employees’ and no exports”.


‘Entirely inapplicable’
“It is entirely inapplicable to transnationals,” it added, citing other studies finding the effective tax rate of between 2.5 and 4.5 per cent.

Ireland placed 47th out of 82 jurisdiction in the TJN’S biennial “financial secrecy index”, topped for the second time by Switzerland and based on analysis of 15 indicators, weighted by a country’s share of offshore financial services. The indicators counted include banking secrecy and access to information on company accounts and other documents related to companies and trusts.

Following Switzerland were Luxembourg, Hong Kong, the Cayman Islands and Singapore.

The US, which topped the index in 2009, now occupies sixth place, while Germany is in eighth place.

Up to $32 trillion in private wealth is secreted away worldwide, untaxed, according to the Tax Justice Network, a campaigning organisation of economists, journalists and policy analysts.

Despite pressure on Swiss banks to disclose fiscal and customer data to the EU and US, the TJN report described the concessions as “limited”.

Britain ranked 21st but would have topped the table if it was combined with “satellite secrecy jurisdictions” it partly controls, including Jersey, Guernsey, the Cayman Islands and Bermuda.

“The City of London and its satellites constitute by far the most important part of the offshore world of secrecy jurisdictions,” write the report’s authors.

The report says that Germany operates a tax and fiscal regime allowing the laundering of up to €57 billion annually by organised crime networks from Africa, Latin America and even Italy’s Mafia.

Germany operates a “worrisome” tax regime that does not foresee the automatic exchange of tax information, it added, allowing many foreign-owned assets in Germany to be held through complicated structures spanning Luxembourg and Switzerland.

“It is still obviously home for large volumes of tax evading and other illicit flows and assets from a round the globe,” the report noted.


Money laundering
The report’s authors claim Germany is a country of “lax anti-money laundering enforcement” and singled out Italy as a primary source of illicit capital flows. There are no comprehensive public statistics on money laundering in Germany, the report notes.

The biennial TJN research draws on reports by governments and international organisations such as the Organisation for Economic Cooperation and Development.