News Irish News

Thursday 14 December 2017

G8 approves major plan to crack down on companies exploiting tax loopholes

Fiach Kelly

IRELAND will back proposals from the G8 which call for countries to stop companies moving their taxes across borders, and to force them to declare how much tax they pay and where.

The commitment by Taoiseach Enda Kenny came at the conclusion of the G8 summit in Co Fermanagh and follows months of criticism – particularly from the United States – on how multinational companies like Google used the Irish tax regime.

However, Mr Kenny said any changes must be made by different countries at the same time and cannot be done unilaterally. He also said there was no question of tax harmonisation.

Tackling tax avoidance and evasion was one of the main themes of the two-day summit, which wrapped up last night with the agreement of the 'Lough Erne Declaration' on tax, trade and transparency.

The first point of the ten-point declaration says "tax authorities across the world should automatically share information to fight the scourge of tax evasion". The second could throw the spotlight on Ireland and countries with similar tax regimes.

It read: "Countries should change rules that let companies shift their profits across borders to avoid taxes, and multinationals should report to tax authorities what tax they pay where."

One of the accountancy schemes to attract attention recently is the 'double Irish', which takes advantage of Irish tax laws that allow a company based abroad to be registered as an Irish company.

Generous

Ireland also has generous laws on 'transfer pricing', which allow a big company to move profits from one country to another, usually for tax purposes.

Those loopholes allow businesses to funnel profits through Ireland and on to tax havens in a completely legal manner and Google is one of the best known proponents of the 'double Irish' scheme.

Mr Kenny says he has no problem in agreeing to the proposals, but insisted "there is a need for an international movement and collaboration among the countries".

"Countries can only do this in unison and Ireland is very much in favour of having the international tax code."

There is no timescale on when the G8 proposals could come into force, or firmer detail on what exactly is being put forward.

Mr Kenny attended a working lunch with the leaders and other figures, such as IMF chief Christine Lagarde, on the summit's final day and discussed Ireland's EU presidency, the union's budget negotiations and the proposed EU-US trade deal.

The Taoiseach had been invited by British Prime Minister David Cameron, who was hosting the event, because of Ireland's presidency of the EU and because the summit was being held in Northern Ireland.

The Taoiseach also said Ireland's corporation tax was brought up at the G8 meeting, but not at any of the fringe events he attended – and he later defended it.

He could not say who brought the issue up, but said the corporation tax rate had been praised.

"Quite a number of leaders were very clear to say that just because a tax rate is pitched at a particular level doesn't mean anything other than that.

"And I was able to remind the meeting of course that our corporate tax rate is statute based and is absolutely clear," Mr Kenny said.

Irish Independent

Promoted Links

Today's news headlines, directly to your inbox every morning.

Promoted Links

Editor's Choice

Also in Irish News