Ireland faces OECD pressure on corporate tax regime

‘Is Ireland guilty? Of course not. It’s being used,’ says OECD director

Secretary-General of the OECD Angel Gurria: Said the Taoiseach had told him Ireland would work with the OECD to stamp out aggressive tax avoidance strategies by multinationals

Secretary-General of the OECD Angel Gurria: Said the Taoiseach had told him Ireland would work with the OECD to stamp out aggressive tax avoidance strategies by multinationals

 

The Government is coming under pressure from the Organisation for Economic Cooperation and Development (OECD) to unwind some of the most contentious elements of Ireland’s corporate tax regime.

As the Paris-based body set out the first phase of a plan to overhaul global rules to ensure big firms pay more tax, the chief architect of the proposals told The Irish Times that Dublin should move sooner rather than later to scrap a contentious scheme known as the “double Irish”.

The arrangement, used by major firms including Google’s Irish unit, plays on the difference between Irish law and offshore jurisdctions to help the company in question to curtail its tax liability.

Without naming any particular firm, director of the OECD centre for tax policy Pascal Saint-Amans said Irish moves in anticipation of change elsewhere would benefit Ireland’s reputation.

“There is an issue because Ireland has been misused by a number of companies to locate the profit in Bermuda,” said Mr Saint-Amans.

“Is Ireland guilty? Of course not. It’s being used. And now we’re providing all the countries instruments to protect themselves from that. Would Ireland move to anticipate these changes? That may be a good move that I think your government is considering.”

Tax rules

The plan is not binding, but moves are afoot to develop a binding multilateral convention in which participating governments would be compelled to modify bilateral tax treaties to minimise the risk of aggressive avoidance.

OECD members, including Ireland and members of the Group of 20 industrialised and developing nations will meet next January for talks on a draft mandate to negotiate a convention to streamline execution of the plan.

Mr Saint-Amans’ remarks came as the OECD’s secretary general Angel Gurria said the Taoiseach had told him Ireland would work with the OECD to stamp out aggressive tax avoidance strategies by multinationals.

The Government is examining whether to take pre-emptive steps in the budget to wind down the “double-Irish” mechanism before similar moves in any other countries, but it remains undecided.

Anxiety

“None of the budgetary issues or Finance Bill issues at this stage have been decided but I would anticipate that we will work with the OECD in the context of them completing their work on the study, which we would expect towards the end of 2015,” she said.

Mr Gurria said he too would welcome unilateral measures by countries moving first in a direction that others would follow.

“I think this perhaps may be perceived and seen as a very clear example of good citizenship, but eventually it will become I think good business because there won’t be any questioning of the companies established in a particular jurisdiction. I say this generally not just about Ireland,” he told a news conference in Paris.

“I was very impressed by the fact that the prime minister of Ireland understood that this was not only financial and a tax question, but that there was a very important political issue, an issue that had to do with the reputation of the country he runs.”