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Noonan Discusses Ireland's International Tax Strategy

by Jason Gorringe,, London

03 December 2014

Finance Minister Michael Noonan has said that Ireland's tax regime is fully transparent and that the Government supports international tax reform efforts.

Noonan told an Institute of International and European Affairs conference that the world of international taxation is changing rapidly. He pointed out that, "in an increasingly globalized world, the differences in tax laws between countries have inevitably led to mismatches which can be exploited by corporations with an ever increasing global footprint."

Noonan believes that the differences between US and European rules in particular have "led to some tension in the international tax arena."

According to Noonan, Ireland, as a mid-Atlantic economy, sometimes gets "caught in the crossfire." He claimed that "it is no coincidence that the majority of European Union (EU) state aid investigations that are taken from a taxation perspective have been directed at US multinationals," and argued that "it is not right or fair that only US companies should be targeted in the international debate on the appropriateness of global tax laws."

Referring to the European Commission's investigation into whether advance tax rulings provided by the Irish Revenue to technology giant Apple breach EU state aid rules, Noonan said that he has been advised that the case against Ireland is weak. He added that, in the unlikely event that the Commission does find against Ireland, the Government will use every legal avenue open to defend its position.

Noonan also stressed during the course of his speech that Ireland has and will continue to learn from past mistakes in the design of its tax system. He said that the so-called "Double Irish" tax regime was never part of the tax code, nor was it "a sustainable way to build a thriving foreign direct investment sector for the long-term." Noonan introduced new tax residency rules in his 2015 Budget, to repeal on a transitional basis the use of the arrangement, alongside which he published a Road Map for Ireland's Tax Competitiveness.

In addition, Noonan has given his backing to calls by the German, French, and Italian Finance Ministers for the European Commission to take certain actions to counter aggressive tax planning in the EU. He said that Ireland will contribute to discussions on a proposed new EU Directive, "while simultaneously holding a firm line that matters of direct taxation remain a member state competence."

Ireland continues to support and participate in the Organisation for Economic Cooperation and Development's (OECD's) base erosion and profit shifting (BEPS) project. However, while Noonan remains positive about the work, he is concerned that "BEPS must not be about advantaging big countries over small countries and equally must not be used to single out US multinational entities." He called for BEPS to instead "strive to provide a level playing field for all."

Noonan is also keen that the BEPS process is not merely "a dialogue of the privileged." He would like to see the OECD insist upon all companies undertaking spillover analyses of how their taxation regimes impact the developing world.

TAGS: Finance | tax | investment | European Commission | Ireland | tax incentives | law | Organisation for Economic Co-operation and Development (OECD) | corporation tax | ministry of finance | multinationals | tax planning | transfer pricing | tax reform | European Union (EU) | Europe | Tax

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