Finance Minister Michael Noonan said that Ireland has little to fear from attempts by the world’s richest countries to get multinational companies to pay more tax, re-iterating that the country’s headline 12.5% rate is not under threat.
Some independent observers, however, say that, in time, Ireland will face more competition and its success in attracting large foreign direct investments will remain under scrutiny.
The OECD yesterday issued its final report on ways to reform global tax structures. Large companies have aggressively planned their tax structures for years and many pay very little tax in any country despite the huge profits they generate across the globe.
Since the global financial crisis, Ireland’s tax regime has increasingly attracted unwelcome attention because so many foreign companies are based here. The OECD plans will mean multinationals must disclose more information about their tax structures.
However, Mr Noonan said the “comprehensive” base erosion and profit-shifting (BEPS) report from the OECD will give certainty to Irish authorities and companies.
“As a first step, we will legislate for country-by-country reporting and introduce a ‘knowledge development box’, which will be the first and only such box in the world that complies with the OECD’s new standards,” said Mr Noonan.
Ireland’s offering to attract investment is now enhanced as the report bolsters companies who bring jobs and make meaningful investments, said the IDA.
Accountancy firm PwC said tax authorities around the world will have greater insight into multinationals, adding that “the new rules have the potential to be positive for Ireland”.
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