Ireland: Tax policy changes could cost €1bn
28 May 2014
Posted by: Author: Geoff Percival
Author: Geoff Percival (Irish Examiner)
International tax policy changes being considered by the OECD could shave €1bn off Ireland’s annual multinational tax take, a Dáil Committee has heard.
Addressing a joint sub-committee hearing on global taxation matters, yesterday, Brian Keegan — director of taxation at Chartered Accountants Ireland — said the OECD’s base erosion and profit sharing policies could have both positive and negative effects for Ireland.
While new transparency proposals could benefit the country, he warned that poor transfer pricing and profit shifting proposals could result in Ireland’s €4bn annual tax take from foreign-owned multinationals falling to €3bn.
He added that any negative international focus on Ireland regarding international tax policies has been "unfair and unfounded” and harmful tax practices are "simply not a feature of the Irish tax landscape.”
He also said that base erosion and profit sharing could make an already difficult international tax environment even more complicated.
Christian Aid’s Sorley McCaughey said Ireland has a reputational problem and is already considered a tax conduit country.
His organisation has called for a country-by-country reporting requirement for companies operating in Ireland.
"In relation to our transfer pricing regime, allowing for retroactive challenges to inward transfer pricing, as well as outward transfer pricing would bolster the integrity of our tax regime,” Mr McCaughey added.
The Government recently said Ireland will benefit from base erosion and profit sharing and is playing an active part in new policy formation.
Finance Minister Michael Noonan yesterday announced the start of an eight-week public consultation process (running until July 22) regarding options for Ireland’s tax system amid the changing international tax environment.
In light of that move, PwC said that base erosion and profit sharing will lead to changes in Ireland’s corporate tax regime and impact many of the countries we compete with for foreign direct investment.
"The outcome of this process, and the changes that are made in other countries, will determine how competitive we are for foreign direct investment in the next 20 years,” according to PwC’s Joe Tynan.
Meanwhile, a new survey from AIB shows that Ireland remains a popular location choice for international firms. Some 97% of multinational respondents said they would recommend Ireland as a country to locate, while 86% said that access to Europe is a key element of locating here.
This article first appeared on irishexaminer.com.