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Ireland revisits tax laws to cook Apple

'Aggressive tax planning' not welcome

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The Republic of Ireland has decided to take another look at its status of “tax haven of choice” for the tech sector.

The nation has flagged its intentions in a Department of Finance "policy statement" (PDF) that Finance minister Michael Noonan says "... for the first time ... sets out Ireland’s International Tax Charter – a set of policy objectives and commitments for how we view and will deal with a variety of international tax policy issues.pondering future international tax arrangements."

The statement says Ireland intends to retain its favourable 12.5 percent tax rate on the trading entities and expresses the opinion that lots of companies domiciled on the emerald isle come for that low, low, rate of tax. The statement also notes that "Aggressive tax planning by companies is a major issue for legislators across the world and it needs to be addressed. Ireland is very much involved in the process of addressing the issue."

The statement suggests Ireland will do so by:

  • Participating in the OECD's Base Erosion and Profit Shifting (BEPS) project;
  • Participating in the European Union's tax-avoidance avoidance activities, some of which it claims to have initiated during its recent presidency of the organisation;
  • Signing new agreements with known tax havens so they must share information with Ireland, thereby making it harder to use havens for "aggressive tax planning";
  • Supporting plans to insist "international companies ... publicly report on a country-by-country basis in their annual financial statements which could discourage profit-shifting between countries".

The statement may help to ease Ireland's reputation as an ingredient in the infamous Double Irish Dutch Sandwich that allows the likes of Apple and Google to move money around the world in order to trim their tax bill. Such schemes are so effective the Financial Times reports a US Senate committee believes Ireland acts as “as a conduit for Apple's earnings” that allows the fruity 'puter vendor to realise an effective tax rate of about two per cent.

Independent.ie explains that the main thrust of Ireland's plan, included in its 2014 budget and due to commence in January 2015, is to put an end to companies operating “stateless” subsidiaries to take advantage of Irish tax rates even though they're operated by a head office somewhere else (sich as the USA).

Recovering a little more tax – for example, getting the tech sector to pay Ireland's 12.5 per cent rate rather than its reported two per cent rate – would also help the country mend its austerity-stricken budget.

The low tax rate has been a sore point in discussions between Ireland and Germany over precautionary funding to help the stricken country out of its post-financial-crisis budgetary woes. ®

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