Sunday 20 October 2019

Ireland toughens its stance on EU tax probe after US cries foul

Michael Noonan. Photo: Frank McGrath
Michael Noonan. Photo: Frank McGrath

Sarah Collins in Brussels

Ireland has warned the European Commission against targeting individual companies in its bid to clamp down on corporate tax avoidance.

"We should be careful about singling out individual companies while processes relating to those companies are ongoing with the Commission and are not yet finalised," Ireland's EU ambassador, Declan Kelleher, said yesterday.

He was speaking on behalf of Minister for Finance Michael Noonan during an EU finance ministers' meeting in Brussels.

His statement appears to be a veiled reference to the European Competition Commission's ongoing probe into Apple's tax arrangements in Ireland, which the EU suspects may have granted the company an unfair advantage.

US Treasury Secretary Jacob Lew this week wrote to Margrethe Vestager, the EU Competition Commission, asking her to reconsider a series of tax probes that he feels predominantly target American companies.

The letter appears to indicate that the US authorities are swinging in behind American businesses, including Apple, in their deals with the EU. As well as the probe into Apple's tax treatment by Ireland the EU is also investigating deals done with Amazon and McDonald's in Luxembourg, and last year ruled that the Netherlands should claw back €30m in lost revenue from Starbucks.

Last month, the European Commission tabled a raft of proposals to close loopholes allowing multinationals to shave up to €70bn from their annual tax bills.

The proposals build on voluntary standards drawn up by the Organisation for Economic Cooperation and Development (OECD) and agreed last year, but go further in several areas.

The European Union wants to close loopholes that allow multinationals to claim tax exemptions on dividends and capital gains booked outside the EU, and to impose an "exit tax" on companies trying to shift high-value assets like patents to lower tax countries outside the bloc.

EU tax chief Pierre Moscovici also wants countries to publish profit and tax information on multinationals operating on their territories.

The rules have to be unanimously agreed by all 28 EU countries before they can become law, and hit their first snag yesterday when German finance minister Wolfgang Schäuble led a charge to put the brakes on an agreement.

He wants the Commission to stick to the OECD's minimum standards and leave the more contentious proposals on dividends and exit taxes for later.

Ireland has consistently argued that the EU should not go beyond OECD standards, a position that was echoed at the meeting by representatives from Belgium, Luxembourg, Malta and Italy, among others.

"Ireland will contribute constructively to these discussions in the EU, as we always do, while simultaneously holding a firm line that matters of direct tax remain a member state competence and tax is a matter of unanimity," Mr Kelleher said.

"We also believe it's important that the EU approach is consistent with the OECD Beps recommendations," he said.

Irish Independent

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