Ireland in crosshairs in debate on tax and multinationals

‘Economist’ editorial labels defensive Ireland a ‘haven’ despite complexity of tax reforms

Multinationals and taxation: some countries see a chance to grab revenue for themselves, rather than to move towards something fair and efficient.

Multinationals and taxation: some countries see a chance to grab revenue for themselves, rather than to move towards something fair and efficient.

 

The spotlight on Ireland in the debate on the taxation of multinationals is relentless. An editorial in the latest edition of the Economist, refers to Ireland as a “haven” where big companies like Apple and Amazon “stash their intangible capital” allowing them to “ pay too little tax elsewhere”.

Ireland may feel hard done by. After all, the big players are moving their intellectual property assets to Ireland because they are under pressure to have no dealings with traditional tax havens like the Cayman Island and Bermuda, where these assets were previously held.

And Ireland does not meet the traditional definition of a tax haven, though it must be said that there is more than a touch of semantics about this.

Sometimes in their demands that Ireland be recognised as an open and transparent system, the Irish Government and foreign direct investment (FDI) and tax lobbies protest too much. Ireland has been part of a chain of countries used for international tax avoidance by US multinationals. Importantly, the latest tax changes in the US are going to lead to companies paying a bit more tax.

Winners and losers

The Economist is correct when it writes that the international tax system needs reform for the 21st century and that, for corporation tax, the role of intangible assets is particularly important. However, reform is politically difficult, yielding losers as well as winners.

In terms of personal taxation, for example, it makes perfect sense to increase tax on property and reduce tax on income, particularly payroll taxes, but introducing this level of change would be political dynamite.

For corporate tax, Ireland has little choice but to participate in the global reform effort. But the problem with these reform efforts is twofold. First, many of the changes threaten even greater complication. And second, some countries see the moves as a chance to grab revenue for themselves, rather than to move towards something which is fair and efficient.

Ireland thus faces the delicate task of accepting some – inevitable – change, fighting off attempts to grab some of the corporate tax revenue paid here and hoping that changes do not take a chunk out of our FDI. The outcome is uncertain, but what is clear is that we are on the defensive.

The Irish Times Logo
Commenting on The Irish Times has changed. To comment you must now be an Irish Times subscriber.
SUBSCRIBE
GO BACK
Error Image
The account details entered are not currently associated with an Irish Times subscription. Please subscribe to sign in to comment.
Comment Sign In

Forgot password?
The Irish Times Logo
Thank you
You should receive instructions for resetting your password. When you have reset your password, you can Sign In.
The Irish Times Logo
Please choose a screen name. This name will appear beside any comments you post. Your screen name should follow the standards set out in our community standards.
Screen Name Selection

Hello

Please choose a screen name. This name will appear beside any comments you post. Your screen name should follow the standards set out in our community standards.

The Irish Times Logo
Commenting on The Irish Times has changed. To comment you must now be an Irish Times subscriber.
SUBSCRIBE
Forgot Password
Please enter your email address so we can send you a link to reset your password.

Sign In

Your Comments
We reserve the right to remove any content at any time from this Community, including without limitation if it violates the Community Standards. We ask that you report content that you in good faith believe violates the above rules by clicking the Flag link next to the offending comment or by filling out this form. New comments are only accepted for 3 days from the date of publication.