Global corporation tax reform proving good for country
42 minutes ago
It appears the requirement from next year for larger Irish companies to give country-by-country reports to Revenue may have prompted some Irish firms to close some of their tax planning schemes
As things stand, it would appear that matters are going Ireland’s way insofar as global corporation tax reform is concerned. The country-by-country reporting rules that have been proposed under the OECD’s Beps programme, and that commentators had been focused on in relation to their effect on US multinationals, have reportedly prompted some Irish companies to start to shut down some of their more aggressive foreign tax avoidance practices.
As was reported in this newspaper at the time of the Luxleaks controversy, a number of Ireland’s largest multinationals have substantial, if employee-less, operations in the tiny duchy. The reports drew attention to the fact that it was not just US-headquartered pharmaceutical and tech companies with large Irish operations that were of interest to the Irish exchequer in terms of the proposed changes to the global business tax rules.
It appears the requirement from next year for larger Irish companies to give country-by-country reports to Revenue may have prompted some Irish firms to close some of their tax planning schemes. When the measure was announced in the budget, it was viewed as another case of Ireland boxing clever in terms of its international reputation. That it could lead to higher returns from local multinationals comes as an unexpected bonus.
The decision of some US multinationals to move some of their IP from offshore subsidiaries to Ireland at this early stage is another welcome fillip to our corporation tax receipts. Most, it is reported, have yet to make any such move, but if it is logical for one or two to do so now, the closing of the “double Irish” tax structure at the end of this decade should prompt a few more to apply similar thinking. Ireland’s 12.5 per cent tax rate can be used as a shield against the greedy designs of policymakers in the UK, France and Germany. Ireland may come to be viewed as a safe harbour in a post-Beps world.
The initiation of Beps was a concern to those interested in the future attractiveness of Ireland’s FDI offering, but it has to be said that, so far, so good. It is often said that the Beps recommendations are likely to be the basic rulebook for the coming two decades or so. A combination of luck and smart policymaking, perhaps, and a break we should make wise use of.