Accenture Shifts Tax Base To Ireland

by Mike Godfrey, Tax-News.com, Washington

01 June 2009

Consulting firm Accenture has announced that its board has unanimously approved changing the company’s place of incorporation to Ireland from Bermuda.

The company announced that shareholders will be asked to vote for the proposed move at meetings expected to be held within the next three to four months.

William D. Green, Accenture’s chairman & CEO, said: “After a careful review, our Board of Directors has determined that changing our place of incorporation to Ireland is in the best interests of Accenture and our shareholders. We believe that incorporating in Ireland will provide Accenture with economic benefits and help ensure our continued global competitiveness."

Accenture, formerly known as Anderson Consulting, was embroiled in controversy in 2004 when the United States Congress attempted to block firms incorporated offshore from bidding for US government contracts. At the time, the firm was attempting to secure a Homeland Security contract to administer the US Visitor and Immigrant Status Indicator Technology (US VISIT) program, worth USD10bn.

According to the Wall Street Journal, the company’s regulatory filing disclosing the planned reincorporation cited legislative proposals announced recently by the Obama administration, which would treat companies incorporated offshore but effectively managed and controlled in the US as domestic entities for tax purposes, as a motivating factor. Accenture’s chief executive is currently based in Boston, Massachusetts, while its operating office is located in Austin, Texas.

However, Accenture’s press release listed Ireland’s membership of the European Union, its network of tax treaties with the US, EU member states and other countries and its “sophisticated, well-developed corporate, legal and regulatory environment” as the reasons for moving its place of incorporation there.

“It also has a long history of international investment and long-established commercial relationships,” the company stated. “In addition, Ireland offers a stable political and economic environment and has the financial and legal infrastructure to meet Accenture’s needs, both today and in the future.”

While Ireland’s rate of corporate tax, at 12.5%, is low by global standards, corporate tax in Bermuda is 0%. However, because the latter jurisdiction does not impose tax, by definition it has not entered into any double taxation avoidance treaties, although it has Tax and Information Exchange Agreements with the US, UK and Australia, and is concluding TIEAs with several other countries in order to meet the new OECD on tax transparency.

The company also stated that Ireland is in a region which accounts for nearly half of Accenture’s total net revenues, is home to many of the company’s largest clients and represents “a significant business opportunity for the company.”

“Today the company serves a wide range of clients in the country, including the Irish government, and has significant operations and a substantial presence there that has grown rapidly in recent years,” the company explained.

Accenture stated that it does not expect any material change in its operations, financial results or tax treatment as a result of the change in its place of incorporation.

If the proposal receives shareholder and regulatory approval then Accenture plc, an Irish company, will replace Accenture Ltd as Accenture’s parent company.

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