Noonan pledges to crack down on business tax avoidance
Ireland is committed to a crackdown on big business tax avoidance, Finance Minister Michael Noonan has claimed.
In a year when the Government has faced repeated attacks over a low corporation tax rate and its popularity with global brands such as Apple, Facebook and Google, the Government has moved to rebuild its reputation abroad.
With a declaration that the 12.5% level will not be touched, Mr Noonan revealed new strategies will be put out to stop multinational corporations being “stateless” for tax purposes.
“Let me be crystal clear. Ireland wants to be part of the solution to this global tax challenge, not part of the problem,” Mr Noonan said.
Included in Budget 2014 is a statement on international tax strategy which sets out Ireland’s objectives and commitments on global tax and avoidance issues.
And in the weeks following the announcement of tax increases and spending cuts, a finance bill will include a reform to ensure that no Irish registered company can be stateless for tax purposes.
It is seen in some circles as a way of ending the notorious practice of companies being headquartered in Ireland and paying low tax levels here and offshore.
This year Ireland has been forced to fend off attacks from as friendly an ally as the US Congress over low corporation tax and the near 2% paid by Apple on the $100bn it made over four years. Irish registered companies were used to process most of the money.
Lately Ireland’s corporation tax has also been the centre of Germany’s next coalition government. The Social Democrats have claimed that the issue must be moved on before precautionary funding deals are in place as the country exits its bailout.
The new rules to stop stateless companies will apply from January 2015.
Kevin McLoughlin, head of tax for Ernst & Young Ireland, said: “This may require certain companies to review their current policies and governance procedures to ensure alignment with the enhanced rules.”
Elsewhere on the reputation front, Mr Noonan revealed plans for a renewed banking levy.
It will cost the main lenders, most of which have been bailed out, €150m from 2014 to 2016 and has been set to “reflect the significant role played by the banking sector in the crisis”.
Mr Noonan said: “Over the last 12 months, the international rules for taxing multi-national companies have been a focus for much debate across the globe. Global challenges require global action.”
He added: “Countries are increasingly competing more and more aggressively for mobile foreign direct investment. I want Ireland to play fair – as we have always done – and I want Ireland to play to win.
“That is why I will continue to examine ways in which Ireland can ensure that our corporate tax regime remains competitive.”
