Noonan: Battle to defend investment not over

As Ireland announced it was happy with the new tax strategy aimed at preventing countries privileging multinationals, Finance Minister Michael Noonan warned that the battle to protect Ireland’s foreign direct investment was not yet over.

Having ended the double Irish and “stateless companies” strategies and signing up to country-by-country reporting in the coming budget, Mr Noonan said the OECD’s plan will play to Ireland’s advantage.

Pascal Amans, the chief architect of the OECD base erosion and profit-shifting (BEPS) paper, said it would turn the focus to the country’s low tax rate giving the country an advantage now that zero-tax havens are expected to come to an end.

However, Mr Noonan said the focus will now switch form the OECD towards the European Union and policy driven by the European Commission.

The changes agreed to by the OECD see two methods of implementation: One with countries adhering to a set of minimum standards already set out, and the second best practice to which countries are expected to adjust.

European commissioner Pierre Moscovici said the EU must ensure corporate tax reform, aligned to BEPS and tailored to the single market, is implemented consistently to ensure a level playing field for all businesses and countries.

Mr Noonan, however, signalled his reservations on this. “When we move to the area of best practice I think the commission will now take it over and we will be very interested in ensuring that what has been decided at the OECD is the policy and that there are not bells and whistles that work against our interest added on by the European Commission so we will be participating in all the discussions,” he said.

One of the areas Ireland will be watching very closely will be proposals for a common corporation tax base to be released in the next few weeks, and which Mr Noonan said Ireland is prepared to discuss all the proposals.

However, he warned that there were two red lines.

“The fixing of rates will still be a matter for sovereign governments as they are now under the treaty, and secondly that any change will require unanimity as it is now with tax matters,” he said.

“Apart from those two matters we are prepared to negotiate in the space.”

He has made changes that allowed multinationals take advantage of the country’s system including phasing out the double Irish, getting rid of the stateless company, and in next week’s budget he will introduce the country-by-country reporting with tax information on multinationals shared between countries and a knowledge box based on OECD recommendations that gives tax breaks for companies doing research and development.

And he defended Ireland’s reputation, saying: “We’re not a tax haven we never have been involved in any kind of tax malpractice.”

He added that sometimes international tax planners used Ireland for example in the so-called double Irish but the double Irish was not an Irish policy.



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