Law would allow firms to use US accounting standards

 

A PROPOSED new law will allow some companies operating in the Republic to file accounts using US accounting standards rather than the Irish or European systems that apply here.

Currently, companies based here have to file accounts using the International Financial Reporting Standards in the case of plcs, or Irish standards for private firms.

The Government intends to publish legislation that will allow some companies to use US Generally Accepted Accounting Principles.

The Department of Enterprise, Trade and Employment has confirmed that the proposal is included in the draft Companies (Miscellaneous Provisions) Bill.

The provision will apply to “certain categories of company” for a “limited period of time”, according to a reply from Tánaiste and Minister for Enterprise, Trade and Employment Mary Coughlan to a parliamentary question from Fine Gael TD Jim O’Keeffe.

The department would not say which companies would be entitled to do this, or for how long, and said these details would be published when the legislation is made public.

The Government has to first approve the legislation before this happens.

The department did say the measure was being introduced in response to representations from IDA Ireland, the State agency responsible for promoting the Republic to multinational investors, a high proportion of which come from the US.

It is understood the measure is aimed at cutting costs for companies moving in here from the US and other countries where the accounting standards apply.

An IDA spokesman confirmed that the Government sought the agency’s opinion on the issue. “We favour it as a transitional measure only,” he said.

The proposal could spark criticism that it might encourage further “brass plate” operations – companies that use the Republic simply for their headquarters to take advantage of tax concessions.

Minister for Finance Brian Lenihan has recently made it clear that the Government does not want such operations moving here after a number of the Republic’s trading partners, which were losing tax as a result of businesses domiciling themselves in low-tax jurisdictions including the Republic, expressed concern at the trend.

One country that has expressed concern at the Republic’s policy is Britain, whose support the Government wants in its efforts to prevent tax harmonisation in the EU, a move that could put the Republic at a competitive disadvantage.