Government is warned global tax reform could hit corporation tax revenues
Business Week: also in the news were INM, a new Central Bank chief and housing
INM chief executive Michael Doorly and Murdoch MacLennan, INM non-executive chairman, at the company’s agm this week
The Department of Finance was presented with another stark warning over the long-term sustainability of the economy this week as a report pointed out that international tax reform could cost the State €2 billion to €3 billion in annual corporate tax revenues.
The figures, contained in a range of estimates presented at a policy conference, were presented by tax experts from PwC and the International Monetary Fund. They relate largely to changes expected to emerge from an OECD reform process.
To combat tax avoidance by major multinationals the OECD is looking at fundamental issues such as where profits are subject to tax, along with how to tax digital businesses.
Separately, the Data Protection Commission has opened investigations into 17 multinational technology companies headquartered in Ireland, including Facebook, WhatsApp, Google, LinkedIn, Instagram and Twitter.
In terms of the State coffers, exchequer figures on Thursday for the four months to the end of April showed income tax generated €6.9 billion, which was €173 million or 2.4 per cent below target and out of kilter with the current growth in employment.
However, the department linked this to a once-off underperformance in February, while noting income tax receipts were up 6.6 per cent year-on-year.
Overall the State t collected close to €15.6 billion in taxes so far this year, 5.7 per cent up on last year’s tally at this stage. The total was marginally below - €26 million – what it had targeted.
Staying with the economy, the Cabinet approved the appointment of Gabriel Makhlouf, a former top UK civil servant who has headed New Zealand’s treasury department since 2011, as the new governor of the Central Bank of Ireland.
Makhlouf, known as Gabby to his friends, beat bookies favourite Sharon Donnery, who is deputy governor at the regulator, to become the first non-national head of the organisation in its 76-year history. He was born in Cairo, Egypt, in 1960.
Interestingly, Makhlouf presided over an OECD report that named Ireland among countries engaged in potentially harmful tax practices during the Celtic Tiger years. He will take over in September from Philip Lane, who is joining the ECB’s executive board in June.
Meanwhile, the old Central Bank building on Dame Street, Dublin, is to house a hospitality and dining area on the top two floors after they were leased for in excess of €1 million a year.
The new restaurant space at the venue now known as Central Plaza is set to provide diners with 360-degree views of Dublin and the surrounding landscape. A perimeter walkway on the building’s ninth floor will also allow visitors to take in the views from outside.
Elsewhere, there are fears for 4,000 jobs in Northern Ireland after Canadian aerospace giant Bombardier announced plans to sell the Northern Ireland business. Trade unions have made contact with potential buyers.
INM makes the headlines
“You’re giving the bloody company away,” investor Donald Pratt told the board of Independent News and Media (INM) at the company’s annual general meeting this week.
There’s never a dull moment at INM these days, and this week billionaire businessmen Denis O’Brien and Dermot Desmond brought years of turmoil to a head as they agreed to sell most of their combined 45 per cent stake to Belgian group Mediahuis.
The €145.6 million deal, which is subject to approval, crystallises a huge loss for O’Brien. Desmond might or might not recover what his stake cost him to amass, while beef baron Larry Goodman will make a 35 per cent profit on his more recent investment.
Mediahuis, which owns newspapers in Belgium and the Netherlands, has taken an initial 27 per cent stake in INM, effectively blocking any rival bidder from mounting a rival offer.
Pratt, whose family previously owned the Avoca Handweavers group, said it was “crazy” for the board to recommend the offer, which represents a little over two times INM’s annual earnings. INM also has €81.7 million cash on its balance sheet. That means the bidder is effectively buying the largest Irish newspaper publisher for less than €64 million.
Responding to the criticism, INM chairman Murdoch MacLennan said it was the only bid on the table, and represented “the best deal for shareholders”.
Thomas Leysen, the chairman of Mediahuis, was in Dublin as the deal was announced. He confirmed the bid took account of recent turmoil, including the data breach scandal that has mired INM in an investigation by High Court inspectors.
Another embattled company, travel software group Datalex, saw its long-standing chief executive Aidan Brogan quit with immediate effect. Datalex has been hit by accounting irregularities, with Brogan being replaced temporarily by deputy chairman Sean Corkery.
In more positive news, Kerrygold became the first Irish food brand to exceed €1 billion in annual sales, helped by its growing popularity in the United States and confirming its status as one of the State’s most successful food exports.
Housing plans hit by objections
The clamour by developers to build apartments in Dublin and other large urban areas continued with applications for more than 1,200 apartments put before An Bord Pleanála over four days.
One of the country’s largest builders, Glenveagh Homes, is leading the charge with two separate applications for 527 apartments at Citywest and Donabate in Dublin among the six large applications made over the four working days last week.
Two other proposed housing projects in Dublin, however, are facing local opposition. A residents’ group in Blackrock brought a High Court challenge to an An Bord Pleanála decision to grant planning permission for more than 200 homes on the grounds of Chesterfield House.
Over at Cherrywood, a woman living next to a proposed €130 million development of 367 homes has brought a legal action against Dún Laoghaire-Rathdown council over its decision to grant planning permission for the project.
Finally, Dublin City Council opted not to acquire units for social housing at three new docklands developments, choosing instead to acquire cheaper units at alternative sites in the city. Its plans for social integration continue to be frustrated by premium docklands prices.