The Irish finance minister, Michael Noonan, announced in his Budget statement on 14 October that the government is putting a stop to ‘double Irish’ corporate tax avoidance arrangements – such as those utilised by multinational corporations Apple and Google – by requiring all companies registered
The Irish finance minister, Michael Noonan, announced in his Budget statement on 14 October that the government is putting a stop to ‘double Irish’ corporate tax avoidance arrangements – such as those utilised by multinational corporations Apple and Google – by requiring all companies registered in Ireland from 1 January 2015 to be also tax resident. For existing companies, there will be provision for a transition period until the end of 2020. Noonan also stated that the 12.5% main rate of corporation tax ‘never has been and never will be up for discussion. The 12.5% tax rate is settled policy. It will not change.’
‘Aggressive tax planning by multinational companies has been criticised by governments across the globe and has damaged the reputation of many countries,’ he said. ‘Schemes that exploit mismatches in tax legislation are being heavily scrutinised by the OECD and others and through the [BEPS] project they will come to an end over time. The so-called “double Irish” is one of many such schemes.
‘By taking action now and making this change as part of a broader reform of our corporate tax system, we are giving certainty to investors about corporate tax in Ireland for the next decade. These measures will enhance Ireland’s corporate tax regime and align it with best practice internationally.’
Christian Aid welcomed the move, praising the development as ‘a landmark moment in the fight for tax justice’. ‘The “double Irish” has come to symbolise all the elaborate tax avoidance schemes that multinationals and their advisers have engaged in,’ said Sorley McCaughey, head of advocacy and policy at Christian Aid Ireland. ‘Ultimately, it has been hugely damaging to Ireland’s reputation and won us few friends. It is beyond time the government closed down it down.’
Meanwhile, accountants Blick Rothenberg said the abolition of the ‘double Irish’ could see large companies moving operations to other attractive low taxed locations such as the UK. Partner Paul Smith said: ‘The increase in a company’s tax bill could see large multinational corporations moving their operations to other countries such as the UK, where the tax rate will be at 20% from April 2015. This will make the UK slightly more competitive in relation to Ireland and, with only 7.5% difference in corporate tax combined with other benefits that the country may offer, multinational groups may see Britain as a better jumping-off point to trade in Europe.’
Writing in this week’s Tax Journal, Heather Self (Pinsent Masons) observed: ‘Merely closing the double Irish structure will not stop tax planning. However, achieving very low effective rates is likely to be increasingly difficult as BEPS moves to its conclusion.’
The Irish finance minister, Michael Noonan, announced in his Budget statement on 14 October that the government is putting a stop to ‘double Irish’ corporate tax avoidance arrangements – such as those utilised by multinational corporations Apple and Google – by requiring all companies registered
The Irish finance minister, Michael Noonan, announced in his Budget statement on 14 October that the government is putting a stop to ‘double Irish’ corporate tax avoidance arrangements – such as those utilised by multinational corporations Apple and Google – by requiring all companies registered in Ireland from 1 January 2015 to be also tax resident. For existing companies, there will be provision for a transition period until the end of 2020. Noonan also stated that the 12.5% main rate of corporation tax ‘never has been and never will be up for discussion. The 12.5% tax rate is settled policy. It will not change.’
‘Aggressive tax planning by multinational companies has been criticised by governments across the globe and has damaged the reputation of many countries,’ he said. ‘Schemes that exploit mismatches in tax legislation are being heavily scrutinised by the OECD and others and through the [BEPS] project they will come to an end over time. The so-called “double Irish” is one of many such schemes.
‘By taking action now and making this change as part of a broader reform of our corporate tax system, we are giving certainty to investors about corporate tax in Ireland for the next decade. These measures will enhance Ireland’s corporate tax regime and align it with best practice internationally.’
Christian Aid welcomed the move, praising the development as ‘a landmark moment in the fight for tax justice’. ‘The “double Irish” has come to symbolise all the elaborate tax avoidance schemes that multinationals and their advisers have engaged in,’ said Sorley McCaughey, head of advocacy and policy at Christian Aid Ireland. ‘Ultimately, it has been hugely damaging to Ireland’s reputation and won us few friends. It is beyond time the government closed down it down.’
Meanwhile, accountants Blick Rothenberg said the abolition of the ‘double Irish’ could see large companies moving operations to other attractive low taxed locations such as the UK. Partner Paul Smith said: ‘The increase in a company’s tax bill could see large multinational corporations moving their operations to other countries such as the UK, where the tax rate will be at 20% from April 2015. This will make the UK slightly more competitive in relation to Ireland and, with only 7.5% difference in corporate tax combined with other benefits that the country may offer, multinational groups may see Britain as a better jumping-off point to trade in Europe.’
Writing in this week’s Tax Journal, Heather Self (Pinsent Masons) observed: ‘Merely closing the double Irish structure will not stop tax planning. However, achieving very low effective rates is likely to be increasingly difficult as BEPS moves to its conclusion.’
