Friday 19 April 2019

Greeks target Ireland with corporation tax move

Greek Finance Minister Yanis Varoufakis wears his motorbike helmet following a meeting with Prime Minister Alexis Tsipras
Greek Finance Minister Yanis Varoufakis wears his motorbike helmet following a meeting with Prime Minister Alexis Tsipras

David Kearns

Ireland has been targeted by a new Greek law that the country's government says is aimed at combating the nation's widespread corporate tax avoidance.

However, critics say a new tax regime that explicitly targets companies doing business in Ireland, Cyprus and Bulgaria undermines Europe's common market and could make it harder for companies to engage in cross-border trade.

Officials in the Department of Finance here are understood to have raised the issue with their Greek counterparts.

Under the new tax rule Greek companies seeking to repatriate profits from any of the three countries will have to pay a withholding tax equal to the country's standard corporate tax of 26pc, even if they have already paid tax on profits in Ireland, for example, unless they can show they were not engaged in tax avoidance. European tax treaties mean that companies should only pay tax on profits once.

The standard Greek corporate tax is 26pc compared to 10pc in Bulgaria and 12.5pc in Ireland and Cyprus.

A spokesman for the Department of Finance here was unable to confirm if Ireland would join Bulgaria which has already made a formal complaint to the European Commission.

Bulgaria, which has one of the lowest corporate tax rates in the EU, has objected to the measure on the grounds that it infringes on "the fundamental principles" of the European Union.

Bulgarian Finance Minister Vladislav Goranov has sent a letter to the European Commissioner saying that the 'withholding' tax is "discriminatory and disproportionate to the intended goals".

"It is assumed by presumption that the transactions are performed with the purpose of tax fraud or tax evasion only on the basis of the fact that the corporate tax regimes in these three countries are more favourable than the tax regime in Greece," Mr Goranov said.

"Allowing a EU member state to adopt national corporate tax legislation that contravenes EU law… [will] undermine the overall functioning of the Community internal market."

Back in Athens, Greek Prime Minister Alexis Tsipras has sought to rally a consensus in parliament for his and Finance Minister Yanis Varoufakis's effort to secure bailout funds after his proposals failed to satisfy his European creditors.

Europe's most-indebted state is locked in negotiations with euro-area countries and the International Monetary Fund over the terms of its €240bn rescue.

The standoff, which has left Greece dependent upon European Central Bank loans, risks leading to a default in weeks.

Irish Independent

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