29/03/21

EUROPE: ‘Free rider’ Ireland urged to get onside in EU tax reforms.

As published on independent.ie, Saturday 27 March, 2021.

A leading MEP has hit out at Ireland’s “free rider” tax strategy, asking the government to get on board with the EU’s corporate transparency drive.

Austrian social democrat Evelyn Regner, one of the European Parliament’s lead negotiators on a draft law on multinational tax reporting, said Ireland should be more “open minded” on tax.

“I hope that Ireland is changing, improving its position in this regard. I’m very much looking forward to having a more open-minded position of Ireland towards transparency issues, towards reporting,” she said.

"We would [like to] find a solution for the whole of Europe, where the whole European Union, including Ireland, is benefitting - and jointly benefitting, not to be a free rider on the cost of others.”

Negotiations between MEPs and national diplomats begin on Monday on rules for ‘public country-by-country reporting’, a proposal the Irish government tried to block last month.

The rules would apply to large multinationals operating in the EU – even if headquartered in the US – with a consolidated global turnover of more than €750m a year.

The targets are giants such as Facebook, Amazon or Starbucks, who Ms Regner says are benefitting from profit shifting while also – in Starbucks’ case in Austria – asking for Covid-19 handouts.

The rules, if agreed, would oblige big companies to publish data including net turnover, pre-tax profits, accumulated earnings and tax paid per EU country – data they currently send only to national tax authorities.

While MEPs have added a safeguard clause allowing companies to temporarily omit commercially sensitive information, they want additional disclosures on public subsidies received, political donations made and sweetheart tax deals done.

Similar rules are already in place for banks, oil and gas, mining and logging companies, and the Organisation for Economic Cooperation and Development (OECD) published non-binding standards in 2015.

The proposal had been languishing in EU lawmaking limbo since 2016, but was revived by the Portuguese finance minister last month.

It is now supported by at least 17 EU countries, including Ireland’s usual allies The Netherlands, Denmark, Finland and Austria.

National vetoes on tax matters don’t apply as it is considered an accounting matter, which the Minister of State for Trade Promotion, Robert Troy, told his EU counterparts last month could set a worrying precedent for the future .

Just this week, an EU parliamentary committee voted through a report asking the Commission to consider removing national vetoes on future digital tax proposals.

Meanwhile, EU leaders said on Thursday that the Commission should press ahead with its plan for a digital levy in June, despite parallel work being done by the OECD on global corporate tax standards.

Earlier this month, Finance Minister Paschal Donohoe told his EU counterparts that going it alone on a digital tax could antagonise the US.

Ms Regner said the US was “losing a lot of revenue when Apple and Facebook shifts its taxes to Ireland” and could benefit from the EU's rules.

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