Ireland - model country in respect of creating tax justice?
A few days ago, a representative of the Irish Department of Finances replied to our Nototaxhavens petition against tax tricks used by corporations. The core of the statement of the Irish speaker: Ireland would be a leading supporter in creating transparency regarding group profit taxation. Apart from that, Ireland would support the fight against aggressive tax planning – hence, against measures adopted by big firms wanting to pay as little tax as possible. However, taking a closer look at Ireland’s tax policy, one gains a completely different impression …
Ireland’s preferential treatment of Apple
The Irish Department of Finance avoids mentioning that when it comes to tax, a number of international groups in Ireland are granted preferential treatment. The Apple case gained in particular prominence: the tax breaks granted by Ireland resulted in the fact that the technology group only had to pay 0,005 % corporate tax in 2014. This is equivalent to an amount of only € 50 for every million € profit generated.
The European Commission finally intervened and rated these tax breaks as illegal state aid. Apple was ordered by the Commission to repay € 13 billion corporate tax to Ireland.
Anybody who now thinks that Ireland would have supported the decision by the European Commission is mistaken: Irish government representatives did not hold back with strongly-worded protests. They want to support Apple to the effect that the technology group does not have to repay any tax. Justice looks different.
What happened to the minimum corporation tax rate?
The email sent by the Irish Department of Finance to the No to Tax Havens team, is lacking any reference to our request to introduce an EU-wide minimum rate for taxing profits. However, in particular this measure would be a very important step to stop the ruinous competition for the lowest profit taxation between EU Member States.
This means that unfortunately Ireland is still far remote from our request for fair group taxation. As long as the Irish do not abolish their special conditions for multinationals and come out in support of a minimum corporate tax rate, Ireland has to be referred to as tax haven and surely not as a pioneer for transparency and tax justice.
The criticism does not refer to Ireland alone: Several additional EU member states show little commitment to stop corporations using tax tricks. In addition some EU countries granted special tax conditions to the multinationals. There is still a lot of work necessary to convince EU politicians and to put pressure on them to get tax justice in the field of company taxation.
Email by the Irish Department of Finance
Dear Sir / Madam,
The Minister for Finance, Michael Noonan T.D., has asked me to thank you for your email and your observations on international tax reform.
Ireland is committed to the OECD and EU efforts to tackle aggressive tax planning. Ireland has been, and remains, a leading supporter of international efforts to increase transparency in the area of corporation tax. Ireland has committed to the BEPS process and will play its full part in implementation.
Ireland was one of the first countries in the world to legislate for country-by-country reporting to tax authorities in accordance with the agreed OECD standard. Over 30 countries around the world have now signed an agreement to share these reports. All EU countries have also agreed a binding Directive to introduce country-by-country reporting and to exchange these reports. The separate proposal on public Country by Country reporting relates to the EU Accounting Directive and is being dealt with by my colleague, the Minister for Jobs, Enterprise and Innovation.
In relation to the Controlled Foreign Companies rules, Ireland has agreed the EU Anti-Tax avoidance Directive which requires the introduction of Controlled Foreign Companies rules from 2019. Ireland will implement this Directive in line with the agreed timelines.
Ireland is engaging constructively in the discussions on the Commission’s CCTB and CCCTB proposals which have only recently begun.
Ireland is also working with our EU partners on agreeing a common EU blacklist of non-cooperative tax jurisdictions. The first iteration of this list is expected to be agreed by the end of 2017.