Noonan says OECD tax reforms must be fair to small countries

Plans to reform the global tax system must not be used to create advantages for larger countries,

Minister for Finance Michael Noonan has said.

Addressing a conference in Dublin, he said Ireland overwhelmingly supported the Organisation for Economic Co-operation and Development’s Beps project on the taxation of multinationals, but had a number of concerns.

The process should not be used to benefit big countries over small countries and equally must not be used to “single out US multinational entities. If Beps took this course it would be merely playing to the gallery”.

Differences between US rules on taxation deferral and the rules in some of Europe’s biggest economies, had led to some tension in the international arena.

State aid

He said the State aid case against Ireland’s tax treatment of Apple was weak and an early resolution would be in the best interests of everyone. If the European Commission did find against Ireland, “we will use every legal avenue open to defend our position”.

In relation to “knowledge development box” proposals, he said proposals from Britain and Germany could be designed in such a way that would limit their scope for smaller countries. Further discussion was necessary, and he urged stakeholders to join the debate.

Mr Noonan praised the role played by the International Consortium of Investigative Journalists in “uncovering information behind the recent Luxembourg tax leaks stories” and said Ireland did not hide its 12.5 per cent corporation tax rate.

The Luxleaks reports involved journalists from a number of media outlets including The Irish Times, the Guardian, Le Monde, and other media groups in Europe, north and South America, and Australia.

Mr Noonan said the Irish tax system was transparent, with its rules clearly laid down in statute.

He said the Beps project cannot be a “dialogue of the privileged”. Ireland was conducting an analysis of how its tax system interacts with the developing world and he called for such an analysis to be adopted “at least in spirit” by all the OECD as part of the Beps project. The director of the OECD’s centre for tax policy and administration, Pascal Saint Amans, said the announcement by Ireland that it was ending the so-called “double Irish” tax structure was perceived as “extremely smart”.

Closing loophole

Ireland’s statement that it was closing the loophole down sent out the message that aggressive tax planning was coming to an end.

Heinz Zourek, director of the European Commission's DG taxation and customs union, said the debate within the union about a Common Consolidated Corporation Tax Base may be revived. He said commission president Jean Claude Junker was interested in reviving the idea but before work could resume, a clear political signal would be required.

The conference was organised by the Institute of International and European Affairs in association with KPMG.

It was supported by McCann Fitzgerald and the media partner for the conference was The Irish Times.