Fianna Fáil Spokesperson on Finance Michael McGrath has said he is concerned by reports that the Government is going to act unilaterally in the forthcoming budget to make changes to the rules governing Ireland’s corporation tax regime.
Last week the OECD published its report on “Base Erosion and Profit Shifting” which is designed to come up with a framework that will end practices that enable multi-national firms to reduce their tax bills by moving profits across international borders.
Deputy McGrath said: “It is my view that claims that Ireland plays a central role in aggressive tax planning by multi-nationals are vastly overstated. It is interesting that in the BEPS report Ireland does not appear in the list of countries cited as having harmful tax practices whereas competitor countries such as Switzerland, Luxembourg, Spain, Britain and the Netherlands are listed. Clearly this is going to be a challenging process for many countries and Ireland needs to act to safeguard its own self-interest. There are 166,000 people employed in multi-nationals in Ireland. This is more than an abstract debate on international tax transparency. Real jobs and economic livelihoods are at stake.
“While some commentators are claiming that unilateral action would enhance our reputation internationally we need to be cautious in how we approach the BEPS process. The report is not finalised and significant changes could yet be made. There are aspects in the recent report that we should be concerned about. A move towards taxing profits in the country of final sale (for example for digital music sales) would be bad news for many software firms based here and would appear to conflict with the overall BEPS aim of aligning the taxation of profits with the location of business substance.
“Instead of jumping the gun at this stage we should honour our commitment to fully participate in the process while at the same time developing national strategies to retain our competitive positions. In particular we need a tax regime that is attractive to firms to develop their intellectual property assets in Ireland. Changing our tax regime without putting in place the long term reforms we need to be competitive could prove very costly to us.”