Saturday 24 March 2018

Ireland warned it's 'coming close to crunch time' on changes to tax regime at EU's behest

Co-ordinated approach needed: Taoiseach Leo Varadkar. AP Photo/Jean-Francois Badias
Co-ordinated approach needed: Taoiseach Leo Varadkar. AP Photo/Jean-Francois Badias

Shona Murray

We are "coming close to crunch time" when Ireland will have to make fundamental changes to its tax regime, a source from the European Commission told the Irish Independent.

Political pressure for Ireland to move to a harmonised EU tax base has increased significantly in recent months.

A crusade by the French government has upped the ante among all EU member states. President Emmanuel Macron says he wants multinationals to pay their fair share of tax in the countries where they make their sales. This view is shared by the European Commission, which last year renewed its proposals to push for a Common Consolidated Corporate Tax Base (CCCTB) throughout the EU.

It is also shared by states such as Germany and Spain whose finance ministers are said to frustrated by Ireland's refusal to share responsibility for tax matters with the EU.

As Ireland keeps reminding Brussels, tax is an area solely for national competence. But several EU officials say the time has come for Ireland to nail its colours to the mast about where it 'really' stands on fair taxation.

So far, Dublin has resisted agreeing to such changes to the Irish tax regime, as it would likely damage the tax advantages multinationals like Apple gain when investing here.

The Irish position is that any changes to how tax giants are treated should come through an international body like the OECD, which is due to publish updated proposals in the spring.

Taoiseach Leo Varadkar and all Irish officials contend that the practice of aggressive tax avoidance will not end if the EU does it alone, as countries outside the EU can then attract such investment.

But Brussels sources say while they are eager to review the suggestions by the OECD, they may not be "robust" enough to tackle the problem.

"We'd prefer to see it happen on a global level too, but if it doesn't conform to how the EU wants to proceed ... if they're not robust or credible enough, then we will go ahead ourselves", they said. "We see the numbers coming from Dublin," and over the years, the Irish Exchequer hasn't been taking in enough money from the likes of Apple and others to warrant such a system.

"We don't see how Ireland can rely on this model," they said.

Irish Independent

Business Newsletter

Read the leading stories from the world of Business.

Also in Business