The abolition of the "double Irish" is a highlight of the 10-year tenure of European Commission president José Manuel Barroso, who said he would put it in his legacy speech. He is due to leave office in two weeks’ time.
However, the plan to introduce patent boxes will be scrutinised to ensure it is not just another scheme to allow companies to evade tax unfairly, according to the EU’s taxation commissioner, Algirdas Semeta.
Mr Barroso said he did not expect that Ireland would change its 12.5% corporation tax rate to bring it into line with other EU countries.
The decision by the Government to change the controversial “double Irish” was “progress” he said.
Mr Barroso defended the pressure his Commission has applied to Ireland to change its tax system that allows multi-nationals to escape paying tax anywhere in the world.
The tax deals with Apple, Google, and other multinationals are being probed by the Commission to determine if the agreements amount to the State subsidising these companies.
“I am not in favour of full harmonisation … but I favour less aggressive tax behaviour with multinationals avoiding paying taxes anywhere in the world … while the common person pays their taxes.
“This puts in question the fairness of the system, which is why [the Directorate general for competition] has acted, with my full support, to investigate some fiscal regimes.”
Mr Semeta welcomed the phasing out of the double Irish but said the commission would look at the details to see how it would work in practice.
“It is important that we push this agenda to fight against tax evasion and that it produces good results.” he said.
On the issue of the Government announcing that its intention to introduce patent boxes to allow companies reduce their tax on profits made from patented research, Mr Semeta said the code of conduct group was assessing similar schemes in nine countries to see if they fit with fair competition.
“They are not wrong per se but it’s important they comply with the fair competition rules, and I hope the code of conduct group will finish as soon as possible — I hope by the end of the year — and I hope that on the basis of this assessment member states will be able to make their own decisions.”
There were calls for the Government to go further with its changes to the corporation tax system from the European Parliament.
Economist and MEP Philippe Lamberts said that Ireland deserved great credit for making the first step, “compared to Luxembourg that has refused to co-operate and the Dutch whose response is denial”.
Ireland was in no way the only country that gives extra benefits to the big companies at the expense of it’s SMEs and citizens, he said adding that Belgium was one example of a country that exercised aggressive tax provisions against its fellow EU states.
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