Matheson lobbied OECD to dilute proposed tax rules

Matheson, the Irish legal firm named in the Panama Papers, last year urged international regulators to water down proposed tougher disclosure rules for international tax avoidance schemes.

In a submission to the Paris-based Organisation for Economic Co-operation and Development, Matheson argued the proposals were too stringent and would place too heavy a burden on clients and their lawyers.

On Monday The Irish Times reported that a senior figure in the firm, Stanley Watson, used offshore arrangements put in place on his behalf by Mossack Fonseca, the Panamanian law firm at the centre of the controversy.

Documents obtained by The Irish Times suggested Mr Watson was to be paid consultancy fees through a Cypriot firm set up by Mossack Fonseca.

Dublin-based Matheson, one of Ireland’s largest law firms, is regarded as a leading expert on international corporate taxation and has built up strong links with US multinationals.

Leader

Both Government and legal sources said this week Matheson was known as the leader in providing tax minimisation and avoidance schemes for international clients.

Last year, as part of a consultation on the Beps process (Base Erosion and Profit Shifting), which is designed to reduce international corporate tax avoidance, Matheson told the OECD it considered “that the proposals will impose an undue compliance burden on taxpayers and promoters”.

Matheson was the only Irish firm to make a submission. However, all of the major global accountancy firms that have Dublin operations also expressed their opinions – but through their London offices.

Tax avoidance

In its draft Beps document, the OECD proposed that certain tax avoidance transactions should be automatically disclosed to tax authorities.

Matheson disagreed: “A regime that requires a taxpayer to obtain such information may also be in breach of the counterparty’s rights to privacy and confidentiality of their tax affairs.

“In other cases it will be impossible for the taxpayer to obtain the information.”

It said that other aspects of the proposals were “unreasonable”.

“If there is a commercial transaction,” Matheson said, “tax avoidance should not be a concern . . . If there is no base erosion, the transaction should not be disclosable. Equally, if the transaction is a commercial transaction, it should not be disclosable.”

Some proposals were “unworkable”; others “should be abandoned”.

A spokeswoman for Matheson said the firm had not been arguing against all proposed mandatory disclosure rules.

“We are supportive of the general mandatory disclosure proposals and focused our comments on a single aspect of the paper which we considered was likely to be unworkable,” she said.