Reforming corporation tax

 

Sir, – There has been some criticism of the Irish authorities for not signing up immediately to the proposed international deal on reform of corporation tax and suggesting that, by not doing so, our international reputation will suffer.

While the participant countries would clearly like us to join in the final agreement scheduled for October – and some of these countries have been trying to change our corporation tax rate for many decades! – it was always well understood internationally that any agreement that might impact on Ireland’s 12.5 per cent rate was going to raise strategically important issues for us.

This is because the corporation tax regime here has played such a strong role in bringing in much-needed multinational investment which has heavily influenced our job creation and economic development since the 1960s. Significant changes took place over the years, since the days when we allowed full tax relief on profits from exports, to bring us to the current 12.5 per cent regime. Each change was the subject of difficult negotiations. Similarly, the current negotiations require careful analysis of the changes envisaged. This includes examination in detail of how the two different parts of the new regime (digital tax and minimum rate) will work, any interaction between them and the overall impact on our tax system including the 12.5 rate itself.

The winds of change have been blowing through international tax regimes for some years now and Ireland cannot, and indeed has not sought to, stand apart from them. Anti-avoidance measures have rightly been introduced to curb abuse. But we should complete our analysis of the latest proposals rationally and calmly and get the best assurances we can for the country consistent with the new arrangements, before coming to a final decision.

It is true that non-tax factors such as skilled staff availability now influence mobile international investment to a greater extent than years ago but there is little doubt that a competitive corporation tax regime will continue to play an important role for a country such as ours. – Yours, etc,

DERMOT B QUIGLEY,

Bray,

Co Wicklow.