Kenny not concerned by G8 strategy on tax evasion by multinationals

Taoiseach says he can support inititative because it does not mean tax harmonisation


Taoiseach Enda Kenny has pledged to support moves by world leaders to overhaul the rules of business taxation, an iniative designed to stamp out aggressive avoidance and evasion by multinationals.

On the final day of their summit in Co Fermanagh, the Group of Eight leading industrial powers pledged assertive action to ensure big companies pay a fair share of tax on profits.

The plan was immediately criticised for lack of precision and fixed deadlines. It is sensitive for Dublin due to criticism of the tax strategies deployed in Ireland by Apple, Google and other large multinationals.

Job-creation policy
While the corporate tax regime is a prime element of Irish economic and job-creation policy, the sense in Government circles is that rapid change is unlikely at the global level.

Set out in a 10-point Lough Erne Declaration, the G8 plan suggests countries change tax laws to close international loopholes which help companies to minimise their payments.

“Countries should change rules that let companies shift their profits across borders to avoid taxes, and multinationals should report to tax authorities what tax they pay where,” the declaration said.

Although his Government has resisted European moves to develop a common business tax system in the EU, Mr Kenny told reporters he could support the G8 initiative and said there was nothing in it about the harmonisation of tax rates.

“There were a number of very valid suggestions made from the G8 about this and in fact the 10-point plan produced by the G8 dealing with tax transparency, dealing with fraud and dealing with trade is something that Ireland can sign up to,” Mr Kenny said.

Asked if he would be willing to change Irish tax law, he said Ireland’s EU presidency had aggressively pursued the G8 principals as regards evasion, fraud and transparency. When it was put to him that the declaration also covered avoidance, he said this could be tackled only by states acting in unison.

Mr Kenny said Irish policy was not raised with him personally but had been mentioned at the summit. He declined to say by whom, but said the references were positive. A source said Canadian premier Stephen Harper mentioned Ireland when pointing out the distinction between tax-rate issues and evasion.

The initiative was lauded as a breakthrough by British prime minister David Cameron, host of the summit, but international tax campaigners said it lacked teeth.

“G8 leaders say they plan to chase tax cowboys out of town but left them leeway to keep shooting billion-dollar holes in our public budgets. Opposition, especially from Canada and Germany, blocked the strong deal the world demanded,” said Alex Wilks of the Avaaz campaign, the lobby group campaigning for a reform of global politics.

The summit was marred by divisions on Syria between western leaders and Russian president Vladimir Putin. In defiance of US president Barack Obama and other leaders, he suggested the Kremlin might sell more arms to Damascus.