REGULATION: OECD Tax Deal Risks Failure.

As published on independent.ie, Friday January 24, 2020.


Ireland could be one of the losers in a "race to the bottom" if a deal to reform company taxes at a global level is not reached this month.

The Paris-based Organisation for Economic Cooperation and Development (OECD) is rushing to broker the outlines of a deal by the end of January that could form the basis for a definitive agreement among more than 130 countries by the end of this year.

The Department of Finance estimates that in the event of a deal being struck that would see multinationals taxed on profits where their goods and services are consumed, the Exchequer may face €800m to €2bn in lost annual revenues.

James Stewart of Trinity College told a conference organised by the TASC think-tank that the OECD proposals were flawed. "The OECD proposals are weak, complicated and are probably weakening further," Professor Stewart said.

Just a week ago, it appeared that the OECD plans, which would divvy up a proportion of company profits for multinationals over a certain size, were dead in the water as France and the US faced off over digital taxes. While France has now backed down, others look as if they will scupper any tough deal.

The UK is pushing ahead with its own tax for now, while other large nations like India and Indonesia will simply not agree to have an OECD deal imposed on them.

"The Irish Government agrees with the OECD," Professor Stewart said. "The EU proposals are much more rational, far more sensible and they would cost the Irish Government quite a lot of money."

Professor Stewart said that the UK proposals alone would cost the State €160m a year.

Apple CEO Tim Cook told the Irish Independent this week that he backed the OECD approach.

"I think the place for that to happen is at a worldwide level, because you can bet that each country is going to have a different point of view," he said. "And so the OECD, I think, is the place for this."

The State has become steadily more dependent on company tax revenues to fund spending, and eight in 10 euro it receives come from multinational companies.

The tax take from companies last year hit a record €10.4bn, or 19pc of all tax revenues.

The former head of the Irish Fiscal Advisory Council has warned company tax revenues could be running as much as €6bn ahead of what is warranted by Ireland's underlying economic performance.

Seamus Coffey said a set of more aggressive tax proposals from the EU would be a bigger threat than Brexit.

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