EU rivals will exploit any tax changes here, top academic warns
IRELAND has lost some international companies to the UK because of the so-called patent box tax break offered by the British government, a leading academic warned.
As Europe probes Ireland's tax regime, Trinity College Dublin professor Frank Barry told the Oireachtas sub committee on tax that other countries were closely watching what Ireland does in regards to its corporate tax rate to potentially exploit "any leeway that we give them".
Britain's patent box regime involves the levying of lower corporate tax rates on profit related to innovations and exploiting patents. Belgium, France, Hungary, the Netherlands and Spain are also said to offer similar regimes.
"I believe already we have lost some companies to the UK who are exploiting that," Prof Barry said, an economics professor at Trinity College.
"It really is a competitive battle so we really have to be careful in what we do because other countries will be there to exploit the leeway that we give them."
It comes just months after Germany's finance minister called for a ban on patent box tax breaks, claiming it resulted in unfair competition for foreign investment.
Corporate tax avoidance has become a hot political topic with austerity-weary voters across Europe angered by revelations of tax avoidance by companies including Starbucks, Google and Apple in the past year.
The Government has come under renewed international pressure after the European Commission announced it was investigating the tax affairs of multinational companies here.
Prof Barry told the committee that we were being "overly paranoid" about the possible reputational impact of having Ireland's multinational tax affairs being discussed on the international stage.
He said he had taking soundings from the 'Wall Street Journal', who told him that the sense out of Silicon Valley was that "this was doing us no damage whatsoever".
People Before Profit TD Richard Boyd Barrett said the reason the corporate tax regime needed to be looked as was because the country was in a "dire state" and that we "desperately need revenue".