Corporation tax - Welcome inquiry

In its biannual report the Organisation for Economic Co-operation and Development (OECD) concluded that Ireland is on the verge of being the first EU country to exit the bailout, but it warned that this state needs “to implement policies that will promote sustainable growth and job creation”.

Current policies do not focus enough on long-term unemployment, according to the report, which highlights the need for reform of tax and welfare structures and closing training schemes that have failed.

At the launch of the report yesterday it was announced that the European competition authority is gathering information from member states about tax rulings in order to investigate the corporate tax arrangements of several member states, especially the Netherlands, Luxembourg and Ireland. This is a preliminary move in broader efforts by EU and US authorities to highlight tax policies that have allowed multinational companies such as Apple and Google to pay minimal tax on multi-billion dollar revenues.

Much has been made about the nominal rate of Irish corporation tax, but OECD recognises that the majority of EU states have effective corporate tax rates that are almost always lower than the nominal rate. As this country claims to have an open and transparent tax system, we should welcome this broad enquiry into effective corporate tax rates.