Get Adobe Flash player

Minister for Finance to tell US congressional leaders global trade should be encouraged

about an hour ago

Patrick Smyth

Minister for Finance Paschal Donohoe: will visit the United States on an official trip next week. Photograph: Dara Mac Dónaill




The Minister for Finance Paschal Donohoe will use an official trip to the United States next week to lobby against Republican tax reform measures that could result in a 20 per cent levy being placed on funds moving between parts of a business in the US and abroad.

The change could hit foreign-owned multinationals with US affiliates and US companies, like many in Ireland, that used inversion deals to move their head offices overseas. The measure is one strand of Trump/Republican plans to cut corporate taxation.

The tax plan would impose a 20 per cent “excise tax” on payments between affiliates of the same company, payments that are commonly made as international divisions trade materials, services and royalties for intellectual property.

It is intended to encourage companies that have relocated their domicile to Ireland or elsewhere, by way of corporate inversions, to look again at their position.

Mr Donohoe, who was in Brussels on Monday for a meeting of EU finance ministers, will tell protectionist US congressional leaders next week that international trade between companies and countries is “mutually beneficial” and should be encouraged.

He will point out that “Irish companies in America now employ as many people as American companies employ in Ireland”. And that Ireland is combating aggressive tax avoidance by “implementing all of the OECD measures necessary to ensure that our tax code meets international expectation”.

‘Offshore operations’

Mr Donohoe told journalists in Brussels that he discussed the Paradise Papers disclosures on Monday with the Revenue Commissioners, who assured him they would be monitoring the revelations as they appeared over the coming days. “In the last number of years the revenue have collected €1 billion in taxation from companies and individuals that, in particular, were using offshore operations to avoid paying their tax liabilities,” Mr Donohoe said.

“Ireland will continue to play its role on a policy level in relation to making sure the right solutions and framework are in place to deal with individuals and companies which seek to avoid paying a fair level of taxation.”

He backed measures being taken in the EU to compile a blacklist of tax havens and said he believed such a list would be finalised by December.

“Ireland is and will play its part in fighting the aggressive avoidance of tax,” the Minister said. “We believe that everybody whether they be a company or individual should pay their tax fairly and pay a fair share of tax . . . Ireland would be one of the first countries to engage in the practice where our revenue commissioners would be able to share information with tax authorities in other jurisdictions and to ensure that assets or income are not being held in such a way as to reduce their ability to pay tax.

‘Tax transparency’

“It is why the OECD has given Ireland the highest rating in terms of tax transparency and the sharing of information “and we’re only one of 22 countries in the world to have that rating”.

Separately, ministers hope to finalise agreement on the revamp of VAT rules for ecommerce when they meet on Tuesday. There is broad support, including from Ireland, with some technical objections, which are expected to be overcome. The vote, like all those involving tax issues, is by unanimity. The proposals (a directive and two regulations) are aimed at making it easier to buy goods and services online, and will help to combat aspects of VAT fraud throughout the EU, estimated at €5 billion a year.

The commission argues the proposals could also reduce administrative burdens on companies trading in other EU markets by up to 85 per cent by abolishing the requirement to register for VAT in every member state.

The directive would create a “one-stop shop” for VAT payments and require the tax to be paid in the member state of the consumer.