Ireland Rejects Oxfam’s Tax Haven Claims

Trust Bloomberg Tax for the international news and analysis to navigate the complex tax treaty networks and global business regulations.

By Joe Kirwin

Dec. 12 — Ireland’s Ministry of Finance, the EU and several other governments have emphatically rejected claims by Oxfam International that the countries are tax havens, with Ireland insisting its corporate tax laws are “fully compliant” with international best practices when it comes to transparency and information exchange.

The Irish government said the country’s low corporate tax rate and patent box—an intellectual property tax incentive—comply with OECD rules and that the country is not simply a jurisdiction to which multinationals move profits in order to benefit from the lower tax rate.

“We only have and want real substantive FDI, the kind that brings real jobs and investment into Ireland,” Irish Ministry of Finance spokesman David Byrne told Bloomberg BNA in a Dec. 12 e-mail statement, in relation to Ireland’s foreign direct investment.

Concerning the 12.5 percent Irish corporate tax rate, Byrne said that as it applies to “a very wide tax base,” it violates no international rules or EU state aid requirements.

Oxfam Dec. 12 issued a report that said the Netherlands, Luxembourg, Cyprus and Ireland were among the 10 “worst” corporate tax havens in the world.

Letterbox Arrangements

Byrne also rejected claims that the country’s low corporate tax rates attract letterbox companies, a tax arrangement that permits companies to set up subsidiaries with minimum requirements, such as a basic postal address, with little to no commercial substance.

“Ireland has not been and will never be a brass-plate location,” Byrne said.

Responding to claims that the Irish patent box regime means companies get unfair tax breaks, Byrne said that the country’s Knowledge Development Box was the first in the world to be deemed fully compliant with Organization for Economic Co-operation and Development rules by the Forum on Harmful Tax Practices.

In the past year Ireland has also agreed, as part of EU legislation, to implement rules requiring country-by-country tax and profiting reporting by multinational companies.

It has also said that by 2019, it will implement the EU Anti-Tax Avoidance Directive, which includes a range of key OECD base erosion and profit shifting reforms.

Ireland is currently locked in an intense legal battle with the European Commission, which in August insisted the Irish government must force Apple Inc. to pay 13 billion euros ($13.7 billion) in back taxes.

The European Commission claims that a tax ruling the Irish government agreed with Apple in the early 1990s allowed the company to shift its non-U.S. profits via Ireland with minimal taxation and therefore violated EU state aid rules.

The Irish government is appealing the matter before the European Court of Justice.

EU, Dutch Counter

The European Commission and several governments also rejected Oxfam’s claims.

The Netherlands is ranked No. 3 on the list behind Bermuda and the Cayman Islands, with Ireland ranked No. 6, Luxembourg No. 7 and Cypress No. 10.

“The European Commission does not agree that EU member states should be on this list,’' a commission spokesperson told Bloomberg BNA via email. “All member states have not only committed to implement the new global standards on transparency and fair taxation (BEPS) but have also agreed on EU law to implement these in a swift and coordinated way.”

Dutch Rebuttal

The Dutch Ministry of Finance told Bloomberg BNA in an e-mail statement that it “does not recognize’’ the conclusions drawn by Oxfam.

“The Netherlands have a corporate tax rate of 25 percent,’' the Dutch finance ministry official said. “The Netherlands also actively cooperate with international initiatives to tackle base erosion and profit shifting within the OECD, as well as within the EU.”

The ministry also noted that under the Dutch presidency of the EU, which took place during the first six months of 2016, the Netherlands guided to conclusion key EU legislation to combat corporate tax avoidance and evasion. These include legislation that requires multinational companies to report country by country profits and taxes paid to national tax authorities, as well as the EU Anti-Tax Avoidance Directive.

To contact the reporter on this story: Joe Kirwin in Brussels at correspondents@bna.com

To contact the editor responsible for this story: Penny Sukhraj at psukhraj@bna.com

For More Information

The report is at http://src.bna.com/kHe.

Copyright © 2016 The Bureau of National Affairs, Inc. All Rights Reserved.

Request International Tax