Director Brian Keegan said specific proposals in the review by economist Seamus Coffey for the Department of Finance on capital allowances for companies holding intellectual property in Ireland could lead to multinationals paying more tax.
Other recommendations in the report that touch on transfer pricing between companies could affect both foreign and Irish-owned companies by adding to the burden of paper work, said Mr Keegan.
Finance Minister Paschal Donohoe said he welcomed Mr Coffey’s findings that increases in corporation tax revenues were sustainable through 2020. Describing the report as a “technical document”, he said he would consult widely on the recommendations.
The report was commissioned by his predecessor, Michael Noonan, following the Government’s decision to appeal the EU ruling that Apple repay the State €13bn in back taxes.
The 140-page report contains 18 recommendations, including measures to ensure the tax code does not favour individual taxpayers, as well as proposals for increased tax transparency.
On the report, Children’s Minister Katherine Zappone said that “Ireland has taken concrete steps towards a better, fairer, and more transparent tax system”.
The report was also commissioned following a period when multinationals faced scrutiny for their global tax affairs and Ireland’s tax regime and accounting arrangements, such as the “double Irish”, generated hostile media coverage across the world.
An initiative driven by the Organisation for Economic Co-operation and Development subsequently led to multinationals rearranging their global tax affairs.
Multinationals transferred huge levels of intellectual property into Ireland, which helped increase the corporate tax base by billions of euro.
The jibe of “leprechaun economics” by a leading international economist came after the transfers artificially boosted the output of the Irish economy as measured by GDP.
The report recommends international transfer guidelines should be passed into Irish law and extended to non-trading income.
The rules could be applied to SMEs but only after taking into account the “administrative burden” on small firms.
It also calls for “an adequately resourced” body to “ensure that Ireland protects its corporation tax base”.
Chartered Accountants said: “The Coffey report into corporation tax policy in Ireland was born of political necessity, but Government should be careful to use its recommendations to modernise the system, rather than as a justification to levy new taxes on business.”
Ibec said the effects on SMEs must be carefully considered.
Fianna Fáil finance spokesman Michael McGrath said Ireland’s tax regime must remain competitive. “In addition to this, we must make sure it is sustainable in terms of our tax revenues and we must continue the progress made on tax transparency.”
Christian Aid said Ireland’s rules on intellectual property “in recent years has become a spectacular source of tax avoidance for multinational companies”.