Ministers defend tax rate amid EU probe
Taoiseach Enda Kenny moved to limit reputational damage after the EU launched a surprise probe into a range of “sweetener deals” which saw Ireland branded a tax haven in the US Congress earlier this year.
Mr Kenny seized on remarks by the head of the OECD block of industrialised nations, Angel Gurria, who came to Ireland’s aid by dismissing the haven allegation.
Mr Kenny also tried to ease fears the real EU target was the country’s attractive 12.5% corporate tax rate which France and Germany have long criticised as too low. “There is no attempt here to change Ireland’s corporate tax rate,” he said.
“We welcome the strong recommendation from the OECD that Ireland is not a tax haven.
“Ireland is very happy to participate internationally with the OECD and others to bring about a transparent and accountable system of collecting tax.”
The EU probe focuses on Ireland, the Netherlands, and Luxembourg, and could be the precursor to a much wider investigation if any allegations of illegal deals with multinationals are uncovered.
The move follows growing outrage in Westminster and Washington over the way global players like Apple and Starbucks channel finances through their Irish operations.
The EU spotlight is to be turned on specific deals Ireland has made with international corporations and follows pressure at the G8 summit to clamp down on global tax avoidance.
If the EU uncovers anything suspicious, it could expand the operation into a formal investigation which could eventually force Ireland to demand tax revenue lost in any “sweetener” deals deemed to be illegal.
A US Senate probe stated that Ireland allowed Apple to apply a corporation tax of 2% and below.
Social Protection Minister Joan Burton insisted the tax rates brought in jobs — unlike the situation in traditional offshore money havens.
“We have, for most of the schemes in Ireland, a relatively high employment rate, that’s not consistent in any way with companies that are variously using countries and where there is little or no employment,” Ms Burton said.
The European Commission said its intention was to “make sure that companies do not receive undue selective advantages” via state aid.
“We are only in a first stage of information gathering at the moment and it is too early to speculate on whether this could lead to any specific state aid investigations,” a spokesperson said.
Fianna Fáil accused the Government of being “complacent” and being slow to react to the building international criticism of Ireland’s tax regime.
An OECD report on Ireland found that while the country was recovering it had been slow to tackle long-term unemployment.
Companies that got sweetheart tax deals may be forced to hand back the money that could amount to billions of euro to the Irish State if the European Commission found it was contrary to state aid rules.
The Government has been asked for information on the tax deals it has with multinationals such as Apple and Google following a report in the US Senate earlier this year that suggested Apple paid as little as 2% tax on $74b (€55bn) worldwide earnings.
However, competition spokesperson Antoine Colombani stressed events are at a very early stage with Ireland, the Netherlands and Luxembourg sent a questionnaire asking for details about their tax deals with a range off companies.
Some information has already been received by the Commission whose role is to ensure that one country or company is not given an unfair advantage over another using taxpayers money.
He said it was too early to say what deals or companies they were interested in, but once they receive all the information they require, they will decide whether to open a full investigation.
Their investigation could be widened to include other countries. Sources suggested that the Dutch have more to fear. When Ireland was forced to abolish tax holidays for multinationals in 1992 they drew up deals, including with Apple, that complied with EU rules.
