‘New corporate tax rules must allow us stay competitive’

Additional reporting by Eamon Quinn

Ireland needs to nail down new policies on corporate taxation that allow the country to be “competitive” but also comply with changes envisaged under global tax reforms. Finance Minister Paschal Donohoe said the race is on to look at reforms as changes are on the way for global corporate taxes.

His remarks in Dublin came after he attended a meeting this week of the OECD, the Paris-based think tank, which has set out a roadmap to try to agree on reforms by the end of 2020.

The latest moves towards reforms are part of the so-called BEPS (base erosion and profit shifting) process, which could see big firms paying more tax where they have significant sales — changes that may reduce revenue intake here.

While Ireland does favour some reforms, the Government opposes efforts to introduce a European digital sales tax for big firms, which is backed by France and others in the EU. Mr Donohoe said debate is under way about global tax policies and the OECD and other countries are looking at changes to policies, particularly with digital taxes.

He said the OECD is the right “forum” where these changes could be made without them “spilling over” into bilateral disputes between countries. Ireland needs to be part of these changes, but also influence and find a “balance” between these reforms and “the right to be competitive”, the minister told reporters.

And with a deadline to agree on reforms by the end of 2020, this would pose a “challenge” for countries such as Ireland, admitted Mr Donohoe.

The Government has hailed its success in push- ing back against efforts of European Commission tax chief Pierre Moscovici, who promoted the EU-wide digital tax to target US multinational giants such as Google and Facebook. The danger for Ireland in the digital tax proposal and other reforms is that it undermines the Government’s defences of the current 12.5% corporate tax regime.

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