Business Irish

Wednesday 21 March 2018

Peter Vale: Ireland should get clean bill of health in any EU tax probe

Any probe into Ireland’s tax regime will show that we have consistently used tax policy as a key plank of our strategy to attract foreign direct investment into the country. 

This finding should surprise nobody.

What any investigation will also find is that our regime is transparent and consistent. 

Yes, we have a low 12.5pc corporation tax rate but no, we do not do special deals.

 It is these special deals for multinationals in Europe that reports say the EU is keen to probe. 

Ireland uses tax policy to attract multinationals because these companies add significantly to our economy.  An obvious question is what impact this latest probe might have on current or future investment here.

In my view, any review will confirm the transparency of the Irish tax regime and close the door on speculation that there were special deals for favoured companies.

This would be a positive outcome for Ireland.

It is of course possible that a probe may uncover evidence in other jurisdictions of preferential treatment for certain companies that may contravene state aid rules. 

I suspect this would have a varying impact on Ireland, the positive being the contrast with our own regime but a negative impact in so far as we may inadvertently be tarred with the same brush.

What is likely to be of far more significance to Ireland is the results of the OECD’s root and branch review of the global tax playing field.

How companies do business across borders has changed dramatically in recent years whereas the tax rules have broadly remained static.  While some way into the distance, a fundamental shifting of the goalposts in terms of how taxable profits are allocated between countries is likely. 

Ireland should come out with a clean bill of health should any probe commence into our tax regime.  We are also well placed to deal with any fundamental changes in the global tax world, with the real possibility that our transparency could lead to a further influx of investment.

Peter Vale is a tax partner at Grant Thornton

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