‘Double Irish’ tax loophole may close

Changes to Ireland’s controversial ‘Double Irish’ tax regime for foreign companies based here could be implemented in next month’s budget, Jobs Minister Richard Bruton has signalled.

Amid pressure from the OECD to close a loophole in the tax code that allows foreign firms pay less tax, Mr Bruton said concerns would be addressed in the budget on October 14. Ireland needed to move “prudently”, he said.

“The OECD have their work half done so we need to consider their report and see what changes we might make at this stage.”

The organisation’s report last week proposed sweeping changes to tax structures for multinationals, including measures to curb corporate tax avoidance, improve transparency, frustrate tax havens and close down loopholes.

Byzantine tax structures for foreign firms here have come under the spotlight, with the US senate suggesting in 2012 that giant firms like Microsoft saved billions of dollars using Irish subsidiaries.

Head of tax at the OECD, Pascal Saint-Amans, told one weekend newspaper it would make “sense” to introduce changes in this budget.

Asked by RTÉ’s the Week in Politics if the Double Irish would be scrapped in the budget, Mr Bruton said:

“Companies have used some difference between our code and other codes, just as they’ve used differences between many other countries.”

All countries needed to act together, he added.

He said work by the OECD — which will be completed next year — needed to be accelerated.

“Ireland is absolutely committed to this process and the process involves all countries moving together to deal with what is a collective problem.”

Finance Minister Michael Noonan is understood to be examining options to address the OECD’s concerns and will discuss these with his department this week.

These could include offering multinationals concessions on other issues, if the Government moves to dismantle the Double Irish. Any restrictions would likely be spread out over several years.

Mr Bruton yesterday also pointed out that there were problems with companies exploiting the Dutch, Luxembourg and British tax codes.

Asked if Ireland was not going to then address the concerns, he replied: “We will make those decisions in the budget.”

He added. “Ireland is determined that we will change the tax code. We want a tax code based on substance and investment related to substance and tax related to the substance.

“A lot of these systems are going to be removed. Ireland will be very competitive in that environment.”