Trust Bloomberg Tax for the international news and analysis to navigate the complex tax treaty networks and global business regulations.
By Ali Qassim
The Irish government has set out its plans to implement international reforms to help combat tax avoidance from multinational companies.
The long-awaited Corporate Tax Roadmap reveals how and when Ireland plans to act on the OECD’s base erosion and profit shifting (BEPS) reforms and the European Union’s Anti-Tax Avoidance Directive (ATAD).
Ireland has come under fire for its 12.5 percent corporate tax rate, which is viewed as very favorable for companies like Apple Inc. and Pfizer Inc., which are based there.
“Ireland has been criticised for the way in which our tax system has been used by multinationals in their aggressive tax planning structures to exploit mismatches among various countries and gaps in the international tax framework,” Minister for Finance Pascal Donohoe said in the foreword to the plan Sept. 5.
Ireland will take the final steps to ratify a super tax treaty by the end of 2018 and seek “further input” on shifting to a territorial tax regime in which businesses would be taxed only on income within its borders, according to the plan.
Ireland does have a “long-term and continuing commitment” to continuing its 12.5 percent corporate rate, the plan said.
Donohoe called for international agreement by 2020 on a tax regime for digital companies. The EU in March proposed a 3 percent tax on large digital companies, though Ireland as been among those that say the bloc shouldn’t get out ahead of efforts in the OECD.
Ireland will likely start a consultation in early 2019 regarding changes to its inter-group pricing rules. Updating those rules is one example of how the plan takes into account “the impact on business,” Kevin McLoughlin, partner and head of tax at EY Ireland, told Bloomberg Tax in a Sept. 5 email.
Ireland plans to introduce controlled foreign company rules by the end of the year. The rules—which would take effect in 2019—are meant to keep multinational companies from shifting profits to controlled subsidiaries in low-or no-tax countries, according to the plan. Having a regime into place by 2019 is a requirement of the EU’s ATAD.
The government would attribute to the parent company any income arising from non-genuine arrangements that a company has put in place to obtain a tax advantage, according to the plan. The approach “should in practice carve out genuine activities in a subsidiary company established for valid business purposes,” the plan said.
“Given the draft legislation has not been shared, companies cannot yet properly assess the impact of these rules, which will present challenges to businesses to assimilate and apply in a very short period,” McLoughlin said.
The government will in early 2019ask for comments comment on either moving to a territorial tax regime or simplifying the rules for the computation of double tax relief.
A territorial regime could make Ireland more attractive to companies, as its current system of worldwide taxation makes it “not as attractive as other locations,” said Peter Reilly, PwC Ireland’s tax policy leader.
Overall, the plan dispels “the notion that Ireland is not taking its obligations of reform seriously,” Reilly said, by “bringing for the first time together the progress made over the last five years and the future path of reform.”
To contact the reporter on this story: Ali Qassim in London at email@example.com
To contact the editor responsible for this story: Penny Sukhraj at firstname.lastname@example.org
Copyright © 2018 The Bureau of National Affairs, Inc. All Rights Reserved.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to email@example.com.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to firstname.lastname@example.org.
Put me on standing order
Notify me when new releases are available (no standing order will be created)