Business Irish

Monday 5 December 2016

Experts agree Ireland has veto on 12.5pc tax rate

Published 03/12/2011 | 05:00

Can French President Nicolas Sarkozy and German Chancellor Angela Merkel force us to raise our 12.5pc rate of corporation tax? We ask the experts.

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•Feargal O'Rourke, partner at PwC, says technically there is no mechanism for France and Germany to interfere with Ireland's low rate of corporation tax.

"It is stitched into the treaties and needs unanimity to change it" he says. But these are extraordinary times and France and Germany want to effectively re-invent the EU. If this happens then "all bets are off" Mr O'Rourke, cautions.

"If Europe's most powerful politicians succeed in creating a new union between member nations it would be hard for Ireland to hold on to the 12.5pc corporation tax rate."

•Brian Keegan, director of tax at the Chartered Accountants of Ireland, says Ireland simply cannot be made to change its rate.

"There is absolutely no legal mechanism under EU treaties to make us change our rate.

"Some decisions in the EU need unanimous voting and taxation is one of them. All the other nations of the EU could vote for the rate to be changed, but Ireland could still retain its rate legally".

•Peter Vale, tax consultant with Grant Thornton, says Ireland still has an effective veto over taxation policy and does not have to change its position unless the government volunteers to make a concession.

"Obviously there could be some kind of barter deal in the future, but under existing rules we are still in control of our own rate. Rates of corporation tax all over Europe are coming down, so Ireland is no longer even the lowest tax destination anymore."

•KPMG tax partner Shaun Murphy says that under current European treaties Ireland cannot be forced to change the 12.5pc rate of corporation tax.

"If the Irish Government agreed, and this was supported in any referendum to amend the treaties that might be required, then of course the rate could change.

"However, Irish government policy and the consensus in Ireland on the issue is clear," he said.

Irish Independent

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