OECD official warns State to ensure corporate tax rate is transparent
The top tax official at the Organisation for Economic Cooperation and Development (OECD) has warned that Ireland needs to ensure the corporate tax rate really is 12.5pc or risk a backlash from politicians abroad.
The OECD is the main international body responsible for coordinating tax policy among rich nations. Cross-border taxation has become a major political issue in recent weeks after concerns were raised that corporations, including Apple, have used the current system to cut tax bills to almost nothing.
The director of the OECD centre for tax policy and administration, Pascal Saint-Amans, was the keynote speaker at a conference on taxation policy organised by the Department of Finance in Dublin.
Ireland's corporation tax regime is low, attractive and could attract real business to the country, he said.
"Just make sure it is 12.5pc and not 2pc," he said.
Lack of transparency on corporation tax can lead to politically-inspired country bashing and company bashing, he said.
Ireland's role in legal tax avoidance by big multinationals created international headlines when a US Senate Committee said computer giant Apple paid an effective rate of tax of just 2pc in Ireland.
Mr Saint-Amans said the fact that tax was an issue for individual countries means there were "gaps and frictions" that could be exploited by companies.
Work, including by the OECD, over the past decades to end double taxation in order to facilitate cross-border trade has led to cases of double non-taxation, where some companies pay no tax anywhere, he admitted.
As part of a process to end that, Ireland is actively working with the OECD to address issues of (tax) base erosion and profit shifting (BEPS), he said.
The OECD is due to present a report on the issue to the heads of government in the world's 20 biggest economies in July.
It will outline proposals to end the situation where some international companies, including Apple, have been able to pay no tax in any country by shipping money through complex cross-border structures.
That could include making company residence dependent on having a real presence on the ground, he said.
A policy like that would be good for Ireland, which wants jobs and factories, he said.
Finance Minister Michael Noonan said Ireland could not act "unilaterally" to address those issues but was working with agencies, including the OECD, on plans for an international shift in policy.