Minister denies claims Ireland has 'free ride' on tax; Reiterates opposition to digital tax

Minister Paschal Donohoe

Finance Minister Paschal Donohoe has denied claims Ireland’s corporate tax regime is giving it “a free ride” as he reiterated opposition to any new attempt to usher in an EU-wide digital tax.

Speaking on a panel at the annual gathering of corporate leaders and politicians at the Swiss ski resort of Davos, the finance minister again said that Ireland was committed to global tax reform led by the OECD.

The panel, called Rethinking Taxes: Creating a Fair and Balanced System, heard claims Ireland was getting “a free ride” while “dragging its feet” over the digital tax.

But Mr Donohoe said Ireland along with some other EU countries opposed an EU-wide digital tax or setting a minimum level of corporation tax, on the basis it would impinge on their national sovereignty.

US tax cuts last year had changed the landscape by incentivising US companies to repatriate profits back to the US, he said.

Asked about whether Ireland was dragging its feet over the digital tax, he repeated that Ireland failed to get the credit for taking on the reforms under the OECD initiative but said the Government was “very concerned” about any system that moved away from the principle of taxing company profits in the location where value was created.

And Ireland had collected the €14bn from Apple but will make its case in its appeal against the European Commission ruling, Mr Donohoe said.

He said he supported Spain’s right to set a digital tax and added that he believed that corporate tax rates following the US tax cuts would not drop as sharply as some believed.

Fellow panellist, Angel Gurria, head of the Organisation for Co-operation and Development, which is driving global tax reform, said Italy and Spain and the UK plan to bring in some form of digital tax.

He said the OECD believed that countries should set their own levels of tax but it opposed “sweetheart” deals, citing the Apple tax case with Ireland, which the EU ruled had broken state-aid rules.

But Mr Gurria said Ireland had dismantled its “Double Irish” tax loophole and that the Netherlands had ended its “Double Dutch” loophole, adding that the Apple case could never happen again,

It was the second year in a row that Mr Donohoe faced claims on a Davos panel that the Government was gaming worldwide tax rules.

Last year, some panellists accused Ireland’s tax regime of facilitating world hunger and poverty by helping multinationals avoid paying their fair shares of tax.

On a separate Davos panel, Taoiseach Leo Varadkar faced calls from Polish counterpart Mateusz Morawiecki and by leading European banker Ana Botin for the EU to review corporate tax regimes.

The Polish premier said that people feel distant from the institutions in Brussels which meant that the EU would need to do more to promote the concept of empowering its people.

He said inequality had been neglected “for far too long” as he linked the issue with what he said were “tax havens” operating in Europe and in the rest of the world which he said the EU should move against.

The Polish government backs the efforts of France’s Emmanuel Macron and Germany’s Angela Merkel for a digital tax.

“But more than that”, he favoured removing tax havens which were preventing a level playing field in Europe, he said.

He said that the EU needed to take account of the way tax systems impede Poland, which was for 50 years under communist rule, saying his “gut feeling” was a middle way between taxing companies was needed.

Ms Botin, who chairs Spain’s Santander Bank, said the principle of paying tax where it was generated was not being adhered to, creating problems for communities and jobs. But she said she was not in favour of the digital tax proposal.

But the Taoiseach said that Ireland was taking in a record level of corporate taxes and no longer tolerates accounting loopholes such as the “Double Irish”.

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