Workable global corporate tax solution is vital to modern business

Analysis: As technology and speed reshape trade, old rules stop making sense

Brendan Halligan, chairman of the IIEA, Heinz Zourek, director general of Taxation and Customs Union at the European Commission, Josephine Feehily, chairwoman of the Revenue Commissioners, and Tom Arnold , director general of the IIEA, at the IIEA Corporate Taxation Conference. Photograph: Eric Luke

Brendan Halligan, chairman of the IIEA, Heinz Zourek, director general of Taxation and Customs Union at the European Commission, Josephine Feehily, chairwoman of the Revenue Commissioners, and Tom Arnold , director general of the IIEA, at the IIEA Corporate Taxation Conference. Photograph: Eric Luke

 

There were a number of recurring themes during the conference on the taxation of multinationals held in the Round Hall of the Mansion House in Dublin.

One was the way public opinion, and the media, is driving a rapidly moving agenda, as the developed countries seek to put a “fit-for-purpose” global tax system in place, in a context where technological advances and an increasingly globalised business world are allowing corporates misuse rules originally put in place to facilitate a stable and regulated system for taxing their activities.

The danger of not putting in place a system that is seen to be working was among the points made by Pascal Saint-Amans, a leading figure in the Organisation for Economic Co-operation and Development’s Base Erosion and Profit Shifting (Beps) project.

Individual countries, in part driven by public outrage, might begin to introduce protectionist measures.

Accountant Mary Walsh, a member of the EU expert group on taxing the digital economy, said the system could be left “floundering” if the Beps project did not bear fruit.

Reputational damage for some of the world’s leading companies was another theme. The chairman of the Revenue Commissioners, Josephine Feehily, said public opinion was driving the global agenda for change. “

Good corporate governance for business must include tax and customs compliance,” she warned. “Tax risk is now a reputational risk for companies.”

Manal Corwin, a senior tax manager with KPMG in Washington DC and a former deputy assistant secretary of tax policy in the US treasury department, said the debate involved a “disproportionate” focus on individual companies, when in fact it was about tax rules no longer making sense, rather than whether individual companies were paying enough tax.

Multinationals ‘demonised’

Mark Redmond

Sorley McCaughey, head of advocacy and policy with Christian Aid, drew attention to how multinationals use transfer pricing to avoid paying taxes in some of the poorest countries.

The OECD may represent 90 per cent of the global economy, but there was a democratic deficit involved in it designing rules that had such enormous impact on the ability of the world’s poorest governments to raise taxes.

The pre-eminent theme, however, was how all that was going on would affect Ireland.

The consensus appeared to be that there was a drive for a greater alignment between business substance and taxation, and that this created opportunities for Ireland.

Tax havens, double Irish structures and brass-plate operations were all very much out of favour.

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