Irish tax haven label ‘wrong’

By Pádraig Hoare

A research paper naming Ireland as the “world’s biggest tax haven” was flawed as it used data more than 20 years old — but the perception could be harmful to the country’s reputation, a leading economist has said.

Martin Lawless, associate research professor at the ESRI and member of the Irish Fiscal Advisory Council (IFAC), told TDs and senators at the budgetary oversight committee that a report by academics at the Universities of Berkeley, California and Copenhagen was wrong in its conclusion.

She said: “There are a number of international definitions of tax havens, where the focus is on whether there is a zero or very nominal rate on multinationals, are they treated differently to domestic firms, are there tax secrecy laws or restrictions on sharing tax information with other countries, and is there no substantive activity associated with the multinational within the country.

“It’s pretty widely agreed across these international organisations that by these set of criteria, Ireland is not a tax haven. The research published took a list of tax havens that had been put together by some academics in the early 1990s, drawing on data from the 1980s, so the issue was they took Ireland’s export tax relief, which was 0% in the 1990s. That tax relief has long been phased out by more than 20 years.

To the extent that there was initially a rationale in 1993 for Ireland’s position on this list of tax havens, I don’t think anybody really agrees it’s any longer the case.

However the perception that the Republic may be considered to be “unfairly competing”, particularly in regard to digital firms, was a concern for the country’s reputation internationally, she said.

A paper by Thomas Tørsløv and Ludvig Wier of the University of Copenhagen, and Gabriel Zucman of UC Berkeley said: “In total, more than $600bn in profits were shifted to tax havens in 2015, which is close to 40% of multinational profits. By our estimates, Ireland is the number one shifting destination, accounting for more than $100bn alone. Singapore, the Netherlands, Caribbean tax havens, and Switzerland come next.”

The Department of Finance said Ireland was not a tax haven and does not meet any international standards for being so.

The work being cited does not provide any definition of a tax haven and appears to assert that Ireland, and many other countries, are tax havens without providing a rationale for that assertion.


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