Multinational tax regime under threat from EU

Ireland could be in for a windfall, if multinationals here are found to be paying less than their fair share of corporation tax, but the country could also face losing its attraction for such global giants.

Ireland takes almost €4.3 billion in corporation tax. The European Commission has been questioning the Government over the past year about how the tax system works, including the so-called “double Irish”, after findings that some companies pay almost no tax on billions of euro of income.

The final decision on whether to launch an official investigation into Ireland, the Netherlands and Luxembourg, and perhaps others, will be taken at a meeting of the Commissioners next Wednesday in Brussels. It is expected to be hotly contested by the Commissioners from the member states concerned, but will have the support of many more, including France and Germany, who have been losing tax because of the Irish regime.

If the investigation does get the go-ahead, a team of specialist lawyers and accountants will decide whether multinational companies get preferential treatment compared with other businesses operating in the country.

Many of the world’s most profitable multinationals, such as Apple in Ireland and Starbucks in the Netherlands, were found to pay little or no tax on huge income during a series of government hearings in Ireland, the US and Britain.

Some Apple companies in Ireland are not located anywhere for tax purposes, while Google and others are incorporated in Ireland, but located in Bermuda where they pay no tax.

Taoiseach Enda Kenny, who has been on a visit to the US where he met Apple chief executive Tim Cook this week, said Ireland would continue to defend its tax system. But if the commission finds the system gives an unfair advantage to firms to the detriment of the State and its taxpayers, it will be considered illegal and such companies could be asked to repay the balance.