EU and UK reforms pose challenge to our corporate tax regime

Ireland's controversial corporate tax regime faces a staunch double challenge, as the UK and EU prepare new measures to deal with companies perceived to be paying too little tax.

The EU is proposing fresh reforms to make it harder for companies to avoid taxes.

An Action Plan on Corporate Taxation will be presented before the summer, focusing on a "fairer and more efficient" system.

The plan will focus on several measures including a relaunch of the Common Consolidated Corporate Tax Base (CCCTB).

CCCTB was intended to provide a single set of rules that companies operating anywhere within the EU could use to calculate their taxable profits - instead of doing so through a single country with a low tax rate.

This could lead to higher tax bills for some companies headquartered in Ireland.

But the European push for shared rules on how business tax is levied has so far been resisted by the Government.

The CCCTB is seen as Commission president Jean Claude Juncker reviving plans for a single European corporate tax base.

The European Commission last month promised an "ambitious agenda to combat tax avoidance and aggressive tax planning".

It included the proposal for the automatic exchange of information between national revenue authorities on tax rulings, the decisions given by revenue authorities to companies, explaining how their businesses are affected by national tax rules.

"Everyone has to pay their fair share of tax," said EU Commission Vice-President Valdis Dombrovskis.

"In the coming months, we will put forward concrete actions to tackle such loopholes or overlaps. We are committed to following up on our promises with real, credible and fair action."

Profits

It comes in the wake of the EU's high-profile probe into Apple's Irish tax treatment, and rulings for multinational corporations by authorities in Luxembourg, the Netherlands and Belgium.

Meanwhile, UK chancellor George Osborne said in his annual budget speech yesterday that the so-called new 'Google Tax' will come into force next month.

The tax means some multinational companies based in Ireland face a new British tax on profits from UK sales.

It follows rows over how much corporation tax some companies pay.

"Let the message go out: this country's tolerance for those who will not pay their fair share of taxes has come to an end," Mr Osborne said.