‘No need for further unilateral corporate tax change’

There is no need for the Irish Government to introduce any further changes to the corporate tax system on a unilateral basis following the publication of the OECD’s draft paper on base erosion and profit-shifting (BEPS), according to Padraig Cronin, head of tax & legal services, at Deloitte Ireland.

‘No need for further unilateral corporate tax change’

“There is no need for Ireland to take unilateral action as a result of the papers issued by the OECD yesterday. The areas of interest from an Irish point of view remain under discussion and will not be finalised until September 2015 at the earliest. We need to remain vigilant and ensure we remain competitive as this process continues to evolve,” he said.

Ireland’s corporate tax regime has been the subject of huge international attention over the past couple of years. The US Senate hearings into the tax affairs of Apple found the tech giant had an effective tax rate of 2%, which was facilitated in no small part by a complex tax mechanism known as the ‘double Irish’.

The Government announced in last October’s budget that it would close down a loophole that formed part of the ‘double Irish’. This had prompted speculation that the Government would introduce further measures on a unilateral basis. Speaking following the publication of the BEPS paper, the Minister for Jobs, Enterprise and Innovation, Richard Bruton, said what companies wanted was certainty. “My view is that we should continue with the multi-lateral approach. I think that is the best way.”

Mr Bruton said that the BEPS proposals could benefit Ireland because the IDA targets companies that make material investments in terms of assets and employees.

Mr Cronin said Ireland’s tax wedge could increase on the back of the OECD proposals. “The emphasis on substance to underpin transfer pricing arrangements provides a growth opportunity for Ireland both from a jobs and corporate tax point of view in the context of existing structures being revised over time with a lower return being earned by the tax-haven owner of the intellectual property. It is important that Ireland introduces a more competitive onshore intellectual property regime in the near term and the BEPS papers provides some guidance as regards the type of regime that may be acceptable.”

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