Saturday 1 October 2016

I thought we'd scrapped the Double-Irish... what next?

Published 06/10/2015 | 02:30

Revelations that some big companies are getting away with paying little tax has caused public and political anger.
Revelations that some big companies are getting away with paying little tax has caused public and political anger.

What's all this Beps talk about?

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Beps - or Base Erosion and Profit Shifting - is a three-year project from the Paris-based OECD to clamp down on global tax avoidance by multinational companies. The rules that govern taxation of profits from international commerce date back almost a century.

However, globalisation and technology that allows products and services to be delivered in non-traditional ways have created opportunities for companies to shift profits out of the countries where the money is earned, and into low-tax, or no-tax, jurisdictions.

Have these companies been doing anything illegal?

Technically no. But although tax avoidance may not be against the law, aggressively using loopholes and arrangements to deliberately shift profits to tax havens is, in the eye of the public, increasingly unpopular, particularly in the wake of the financial crisis.

Revelations that some big companies are getting away with paying little tax has caused public and political anger.

Technology giants are seen as the most adept at exploiting loopholes, but drug makers, medical device groups, banks, fast food groups and retailers all commonly use contrived arrangements to cut their tax bills.

I remember there was some talk of Ireland being a tax haven. Is this the case?

The experts will say no, and that includes the OECD, which is leading this global clampdown. However, companies were exploiting loopholes in our own tax structure to ensure they paid little tax. The Government has, in the previous two Budgets, moved to shut these, including the so-called Double Irish.

Is Ireland's 12.5pc corporation tax rate in doubt?

No. This has nothing to do with the rate on offer from a country.

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Colm Kelpie

Irish Independent

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