Widening of tax probe takes heat off State

The issue of Ireland’s tax regime was not raised for the first time in a long time at the EU summit, showing that pressure to change its tax regime has lessened as a result of the EU investigation being widened to include all EU countries.

Taoiseach Enda Kenny welcomed the broadening out of the investigation into so-called sweetheart deals with multinationals to all 28 EU countries and said that Ireland had nothing to hide and nothing to be afraid of.

However he did admit that Ireland’s reputation was damaged by the confusion caused by the European Commission’s investigation into just three countries’ tax arrangements with multinationals.

He was joined by Luxembourg that announced it was releasing information to the commission that it had refused to hand over up to now. Their prime minister, Xavier Bettel, said: “We always said that fishing was not the right way to work,” adding that now the investigation was to cover all EU countries, they were happy to share their tax rulings.

Mr Kenny, attending the EU summit in Brussels, said Ireland would continue to defend the 12.5% corporation tax rate, and had already absolved the stateless company concept and will be abolishing the ‘double Irish’.

“We are co-operating completely and fully in the OECD’s BEPS (base erosion and profit shifting) analysis and we will play our part, but what we will not be doing is changing our corporate tax rate.”

He said Ireland had sustained certain repetitional damage as a result of the perceptions and confusion caused by the commission’s investigation into Apple’s tax arrangements here. They also opened state aid investigations into Starbuck’s arrangements in the Netherlands and Amazon and Fiat financing in Luxembourg.

“It is important to say that all countries are going to have an examination carried out on their tax matters so what applies to one will now apply to all. We are very clear on this, very upfront, we have nothing to hide and we will defend our corporate tax as a national issue.”

Pressure came on the commission from two sets of leaked documents showing the tax arrangements Luxembourg came to with a host of multinationals including FedEx and PepsiCo.

Most if not all were negotiated while current president of the commission, Jean Claude Juncker, had a dual role of prime and finance minister of Luxembourg.

Earlier this week Competition Commissioner Margrethe Vestager announced she was extending the investigation to all member states. It is not clear if this will include off shore protectorates of the UK such as the Virgin Islands and Bermuda, regularly named as tax havens.

Europe Minister Dara Murphy said Ireland hoped the investigation wouldn’t take too long.

EU leaders also discussed the joint European Commission, European Investment Bank investment fund which will lend to member states and private business for developments designed to encourage growth.

Mr Murphy said there was agreement that the funding would be provided to a broad range of projects. “This will be very helpful to Ireland as we have a number of big projects such as energy interconnectivity that would qualify.”