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We shouldn't act before international agreement is in place

IF the Government thought the storm over how companies use Ireland to avoid paying billions of euro in tax was going to ease over the weekend, then they were sorely mistaken.

Most of the newspapers and news shows carried the row in some form or other, but perhaps the most damaging idea put forward in the media was that the Government may unilaterally amend its tax law to end the "Double Irish" tax-avoidance scheme.

The scheme allows big companies to legally move their international profits through Ireland and on to a tax haven, and the Americans in particular hate it.

It's fair to say that the US, France and Britain – to name but three countries – would be delighted if we closed the loophole tomorrow.

But it would be foolish for us to do it without some sort of international agreement first.

The US tax code is a mess. It should not be our job to fix what the US government hasn't been able to do for years. The same can be said for EU tax laws, which annoy Britain and France so much.

Much as other countries might hate it, as the Government has repeatedly highlighted, Ireland does comply with all international tax agreements.

We are not the only low-tax country around. Switzerland famously gives special deals on corporate tax to countries investing there, and makes no apology for it. The likes of Luxembourg, Singapore and increasingly the UK are all competing with Ireland to attract big multinationals.

So why should we tie one hand behind our back in that fight?

If the Government did remove the loophole on its own, and the multinationals that employ 150,000 people here upped sticks to, say, Luxembourg, where would we be then? It's fair to say the electorate would not thank the Coalition for being so upstanding.

Next month, the G8 will discuss reforming international tax laws when it meets in Co Fermanagh. The Government is right to come out in favour of international tax reform – but it would be wrong to do it by itself.

Irish Independent