Noonan defends tightening up of 'stateless firm' tax loophole
FINANCE Minister Michael Noonan defended his reform of the "stateless company" tax loophole in the face of criticism from US business people.
Yesterday, Mr Noonan said the reform -- which he introduced in this year's Budget -- was necessary because the tax loophole had "caused Ireland great reputational damage" and "the solution was in our hands".
The loophole until recently allowed companies to incorporate in Ireland but declare profits in other low-tax or tax-free jurisdictions, meaning they could in theory pay no corporation tax at all.
The minister was speaking at the American Chamber of Commerce Ireland's annual Thanksgiving lunch, which was attended by 400 senior executives from some of the biggest US companies in Ireland, including Intel, PayPal and Hewlett Packard.
"It was of no advantage to us because we got no revenue out of it," he said.
His comments were a response to remarks by Peter Keegan, president of the American Chamber of Commerce Ireland, who asked the Government not to make any more unilateral tax changes.
"While the changes may be modest and indeed sensible, we must caution against further unilateral changes to our tax code at this time," said Mr Keegan. "As we all know, investors crave certainty -- and unexpected actions create uncertainty, which in turn can unsettle international investors.
"Given current global events, we believe it would be wise for Ireland to only make changes in relation to global tax matters in the context of international changes rather than any further unilateral action."
Mr Noonan confirmed that the Government will not make any further tax reforms on its own and, instead, it will fall in line with any international moves which have the support of the G20.
"We don't see ourselves as part of the problem, we see ourselves as part of the solution," he said.
However, he repeated his commitment to a 12.5pc corporation tax rate and said Ireland was legally entitled to keep it. He said the Government was now under less pressure on that front as corporation taxes were falling around the world.
The minister added that ratings agencies "were strongly in favour" of the decision not to draw down a precautionary credit line to shore up Ireland's bailout exit.
Moody's is the only ratings agency that still classes Ireland's credit rating as "junk".
He added that the bailout exit gave him a secret satisfaction with "all those people who told us it couldn't be done. All those celebrities who seem to have bed and breakfast in Montrose, all those guys who told me we'd have to default, who told me we'd never create a job in this country again.
"We are not exuberant, we're not going to be marching behind brass bands on the street when we leave the bailout in December -- but we have come a certain distance," he said.