Sunday 25 February 2018

European chief takes aim at Irish tax regime as 'not transparent'

Minister for Finance , Michael Noonan
Minister for Finance , Michael Noonan
Colm Kelpie

Colm Kelpie

Ireland's corporate tax regime is not transparent, the head of the European Parliament's special committee on tax rulings said.

On a visit to Dublin yesterday, Alain Lamassoure said Ireland's regime may be transparent for "the experts, for the big four [audit firms], for Apple, probably".

But he added: "The simple explanation of how you combine the so-called Double Irish and the Dutch Sandwich... is not that transparent."

The Special Committee on Tax Rulings of the European Parliament was established in the wake of what has become known as the Luxleaks revelations by the International Consortium of Investigative Journalists.

Mr Lamassoure stressed he had no issue with Ireland's 12.5pc rate and that he wasn't against tax competition. He said he didn't agree with the criticisms once levelled at Ireland over its rate by former French President Nicolas Sarkozy.

"Nobody can be against tax competition. Tax competition is a fact of life," Mr Lamassource said, after meeting Finance Minister Michael Noonan and the Oireachtas Finance Committee.

"Tax competition, yes. But with the same principles and rules applicable to competition in all other fields, meaning transparency and fairness.

"The problem with tax competition today, in Europe and globally, is that it is obscure and unfair. The way to ensure fairness is a common tax base."

The so-called Common Consolidated Corporate Tax Base (CCCTB) proposal was heavily debated a number of years ago and was intended to provide a single set of rules that companies operating within the EU could use to calculate their taxable profits.

Ireland was not in favour of the plans. A revised proposal is expected to be presented by the European Commission by the middle of June.

"We must agree on a common tax base. And to do on corporate tax, what we did 40 years ago, in harmonising our tax base for VAT," Mr Lamassoure said. "We have a common tax base for VAT, with different rates and we compete on the rates. It works perfectly well and we must do the same."

Mr Lamassoure described his meeting with the minister as an interesting, candid and blunt exchange of views.

Asked if there was a possibility that the proposed Knowledge Development Box would simply replace the Double Irish, he said that must be avoided.

"First we must be sure that the Double Irish will be over. And that for instance all the enterprises who benefited from the Double Irish before December 2014 won't keep it for ever.

"We are told that there is a phasing out until 2020. What does that mean?

"There is something which remains a bit unclear for me. I'm not sure that that means that as of 2020, or 2021, the Double Irish will be over for everybody, including former beneficiaries."

Mr Lamassoure said that if the scheme is over, it must be ensured that "another scheme doesn't off-set a comparable level of advantage for the same beneficiaries."

"We will be careful, we will be attentive, but we have no reason to question the statement made by the Minister," he said.

He also said that in Ireland's case, the problem was not tax rulings.

"In Ireland's case, it's not a ruling. It is an opinion, with no legal force, which is not binding to the administration. It is a huge difference to what is called a tax ruling," he said.

The European Commission has accused Ireland of striking a tax arrangement with technology giant Apple that was based on keeping jobs here but which gave the company an advantage that amounted to state aid and went against international guidelines.

But the Revenue Commissioners has said Ireland does not provide tax rulings. The Brussels investigation is ongoing.

Irish Independent

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