01/04/21

IRELAND: McGrath says EU countries are jealous of jurisdiction’s tax success.

As published on independent.ie, Thursday 1 April, 2021.

The Minister for Public Expenditure has urged EU critics to lay off Ireland’s corporate tax strategy, putting their negativity down to “envy”.

“If we’re to be honest, Ireland is viewed with a degree of envy across the European Union because of the remarkable success we continue to have in foreign direct investment,” Michael McGrath told video conference yesterday.

“The 12.5pc corporate tax rate here to stay, it is the bedrock of our foreign direct investment strategy.”

He said Ireland has “implemented so many reforms in recent years” that are not acknowledged by other countries.

“Critics continue to focus on issues that have been addressed and that belong to the past,” he told a webinar organised by the Institute of International and European Affairs.

“I would ask people to acknowledge the reforms that we have undertaken as a country in relation to our corporation tax code, and the positive role that we continue to play at OECD [Organisation for Economic Cooperation and Development] and EU level in addressing tax challenges that arise from digitalisation and indeed from globalisation.”

Earlier this year MEPs named Ireland in a list of international tax havens.

Last year the government finally ended the infamous “double Irish” tax loophole that allowed multinationals to shift intellectual property assets to tax havens. It did so under EU pressure.

However, the government has opposed multiple corporate tax proposals at EU level, including a draft law that would make public the amount of tax paid by multinationals in each EU country.

The government is also nervous about an impending EU digital levy, which it fears could undermine work being done by the OECD.

The US recently unblocked the OECD negotiations, where experts are drawing up guidelines on taxable profits for tech firms and minimum tax levels for all multinationals.

“It is our strong preference that it would be done through the OECD, and I think the renewed commitment of the US administration now, under President Biden, to that process, is particularly welcome,” Mr McGrath said.

The government has estimated Ireland’s tax revenues could take a €2bn hit from the OECD measures.

“It will represent a challenge for Ireland,” Mr McGrath said, “but nonetheless it is still in Ireland’s interests that an agreement would emerge from that process.”