Corporate tax regime still faces scrutiny

Despite the fears of not so long ago, the Irish economy is beginning to once again grow strongly.

Sure, unemployment is still stubbornly high but it’s nowhere as high as it was just a few years ago.

There is more positivity about.

Folk are beginning to spend money again and indeed the number taking foreign holidays is increasing. It is easy to say that things are getting better but it’s got a long way to go and as with everything there is the potential for major bumps.

We are blessed in the success we have had in attracting the thousands of foreign companies to these shores.

These companies are attracted to Ireland for a myriad of reasons, low tax being a major factor. However, there are other reasons.

We have immediate access to a market of over 500m people in the European Union across the 28 member states.

We have a young, educated workforce, reasonably consistent government policies irrespective of who is in the driving seat, and we speak English.

There are worse places to do business.

However, tax breaks are still the single major reason most members of the foreign direct investment fraternity are in Ireland.

Our corporate tax policies, which have remained fairly consistent over many years, have nearly always been under attack.

Over recent years these attacks have multiplied, even as our success at attracting investments has continued to make us once again one of the fastest growing economies in Europe.

We can only hope that it’s not all on the back of shifting sands.

Over the last several years the Commission has focused on the corporate tax implementation policies practised by several European countries.

Yes, that is correct we are not alone.

Several were found to have skeletons in the cupboard.

Luxembourg, for instance, had a whole suite of wardrobes of unusual tax arrangements with multinational companies.

It appears that while many, if not most, of the tax structures were drawn up during the former premiership of Jean-Claude Juncker, it did not for one minute affect his selection as EU president.

Companies such as Starbucks, with its main European offices in the Netherlands, appeared to generate considerable revenues in the UK, but still only paid a minimal amount of tax there.

The major target here in Ireland is Apple.

In Cork, Apple has been a major plank in the industrial infrastructure of the region since 1981 and employs well over 4,000 employees.

It is a phenomenal success story for the region.

Last year, the EU accused Ireland of drawing up tax arrangements with Apple that was focused on giving an advantage to Apple that amounted to state aid.

It questioned two tax rulings made in Ireland on how the company’s tax rate would be calculated.

It suggested that the ruling was ‘reverse engineered’ to ensure a specific taxable income for Apple. To put it mildly it’s serious fighting talk.

Like with everything else, legal minds differ on the validity of the claim by the EU and whether it will have an impact on Apple and on Ireland.

At worse, it would appear to be that Apple might have to pay back tax and huge penalties.

Let us not forget that our friends in the EU, France and Germany in the main, have been sniping at our corporate tax policies for some time.

Unfortunately, some of Ireland’s tax policies were skewed and had to be removed, such as the notorious ‘double Irish’.

We should not forget either that our competitors really have no interest in fair tax policies whatever they might say.

Their only interest is how they might benefit.

After all, from a market perspective France and Germany have a market of almost 150m people between them.

The fact that we are far away from the European mainland and must use some of the most expensive shipping in the world is a problem.

So much for solidarity.


Lifestyle

Helen O’Callaghan says we are the least strict in all of Europe.Praise over punishment: Irish parents least strict in Europe - study

Kya deLongchamps detects a hint of rebellion behind the ritual of afternoon tea.Vintage View: English tradition of afternoon tea won't exit with Brexit

Friends and Young Offenders actors Shane Casey and Dominic MacHale speak to Pat Fitzpatrick about struggling to make it but why they are not seeking out fame.‘I was down to a euro’ - The Young Offenders actors tell of struggle to make it in acting

Gerry Fitzgerald runs Bandon Books Plus in Riverview Shopping Centre, Bandon, Co Cork.We Sell Books: Turning over a new leaf from bank to bookshop in Bandon

More From The Irish Examiner