MAJOR changes to the international tax landscape has been proposed by a global economic think-tank with major implications for Ireland.
The Organisation for Economic Cooperation and Development (OECD) unveiled its first recommendations for a co-ordinated international approach to combat tax avoidance by multinational enterprises.
The Paris-based organisation is trying to stamp out tax avoidance by big companies and create a single set of international tax rules and clamp down on the shifting of profits to jurisdictions to avoid paying tax.
Finance Minister Michael Noonan said Ireland has been involved in all aspects of the discussions and welcomes the publication of the reports.
“Significant progress has also been made in the areas of coherence, substance and transparency and while further work is required in some of these areas, the reports are a further step towards multilateral co-operation on countering base erosion and profit shifting by multinationals,” he said.
The OECD has detailed its recommendations in seven areas, including rules to prevent the abuse of international tax treaties, country-by-country reporting of revenues, profits, taxes paid for multinationals, and measures to deal with transfer pricing.
Politicians and officials have been scrutinising the tax strategies of Google, Apple, Amazon, Starbucks., and others, which have used avoidance techniques nicknamed the “Double Irish” and “Dutch Sandwich.”
The OECD recommendations could also hinder the recent wave of tax “inversions” by US companies, which combine with smaller foreign countries, such as Ireland, to move their addresses overseas.
Reacting to the report, Minister for Jobs, Enterprise and Innovation Richard Bruton said: "We've always defended the integrity of our system and I think today's report shows that the objective of the BEPS process is very much in line with the Irish approach.
"They want to see that the right to tax is aligned with economic substance. That is the very heart of the IDA approach.
Certainly the international tax arena will be changing, but we need to move together as countries to create on a multilateral basis a set of changes that prevents the opportunities for very aggressive tax planning which has been a feature of international tax in recent years."
He added that Ireland can gain from this.
"There will be new opportunities that will emerge in a post base erosion and profit shifting (BEPS) world which Ireland is well placed to exploit.
"This report looked at harmful tax regimes, Ireland received no mention in that area, because Ireland doesn't have harmful tax approaches.
"There will be a series of changes that we will have to implement collectively, you will see a different international approach, and I think Ireland's objective is to make sure in the post BEPS world that we continue to be competitive with the sort of regimes that respect the international principles that we're now working together to create," Mr Bruton said.