Ireland ‘needs to do more’ to address aggressive tax planning

Ireland needs to do more to address the issue of aggressive tax planning, the EU Commissioner for Taxation has said.

Speaking in Brussels this afternoon, Commissioner Algirdas Semeta, said that, while he welcomed the announcement by the Irish government last week of a public consultation on the OECD Base Erosion and Profit Shifting (BEPS) project, Ireland still need to do more to fix its legislation to address the issue of aggressive tax planning.

Malta, Luxembourg, Cyprus, and the Netherlands were also urged to do more to address the issue of base erosion and profit shifting.

Commissioner Semeta was speaking at the publication of the European Commission’s annual country-specific recommendations for EU member states in Brussels. It is the first time Ireland has been included in the annual review since exiting the bailout in December.

Among the report’s main recommendations for Ireland are in the field of healthcare, with Ireland’s public healthcare expenditure among the highest in the EU.

The Commission noted that public healthcare expenditure in Ireland was 8.7 per cent of gross national income, compared to an EU average of 7.3 per cent. This is despite Ireland’s relatively young population.

Financial management and accounting systems are fragmented across the Irish health system, the report noted, while the high level of pharmaceutical expenditure is another challenge, with expenditure on out-patient drugs comparatively high.

In its review of the Irish economy, the European Commission called on Ireland to facilitate higher labour market participating by women, by improving access to more affordable and full-time childcare, particularly for low-income families. Ireland has one of the highest proportions of people living in households with low work intensity in the EU, the analysis found. Other countries with low female participation in the work place include Austria, Germany, Malta, Poland, and Italy.

While long-term unemployment has fallen gradually with the recent improvement in the labour market, the report noted that long-term unemployment continues to increase as a proportion of overall unemployment, representing 61 per cent of the total at the end of last year.

Similarly, the proportion of young people not in unemployment, education or training, increased by eight percentage points between 2007 and 2007 to 18.7 per cent. While this has now fallen to 16.1 per cent, it is still one of the highest in the EU.

The financial sector continues to pose a challenge to economic recovery, the report found. Lending to sme’s remains weak, it states, while banks need to make further progress in tackling non-performing SME loans.

It noted that the Credit Review Office has had a limited impact, in part because of the low number of cases that have been brought to the attention of the Office. Other challenges facing the Irish economy include the high level of legal costs. “Unlike for other professional services, legal services costs have failed to adjust downwards since the onset of the crisis, in part due to insufficient competition.”

The European Commission has urged the government to enact the Legal Services Regulation Bill by the end of this year.