19/09/22

IRELAND: EU committee looks for renewed commitment to 15% corporate tax rate.

As published on irishexaminer.com, Sunday 18 September, 2022.

The chairman of an EU tax subcommittee is looking for renewed assurances that Ireland is still committed to a minimum corporate tax rate of 15%, amid lingering concerns from EU institutions about Ireland’s ability to regulate several tech giants headquartered in Dublin.

Dutch MEP Paul Tang and five other MEPs from the European Parliament subcommittee are due in Dublin on Monday for a two-day visit.

They will meet Finance Minister Paschal Donohoe, a representative from Revenue, and groups including the Irish Congress of Trade Unions and the Irish Business and Employers Confederation.

Mr Tang, an economist, said previously that his aim as chairman of the European Parliament’s FISC committee was to spark debates in the capitals of EU nations about fairer tax systems.

“The decision-making (on tax matters) is still very much behind closed doors. And what we try to do with the FISC committee is to break this open, to make the debate public,” he told Forbes in a March 2021 interview.

“If we can bring part of the work of the FISC committee to the capitals, I think it’s already an enrichment of the debate, but also increase public awareness and raise public pressure for change.”

Ahead of the visit, Mr Tang told the PA news agency that one of its purposes is “to conclude decisions on the minimum corporate tax rate”.

In 2021 more than 130 jurisdictions, including all EU member states and members of the Organisation for Economic Co-operation and Development (OECD), agreed to set a minimum global corporate tax rate of 15%.

Although Hungary indicated in June that it is no longer backing the proposal, Mr Tang said there is “a clear initiative” for EU member states to bypass Hungary’s veto to continue with the deal.

“I would be happy to hear that Ireland is still part of the initiative, that would be good for the OECD agreement, but it would also be a good response to Hungary if the EU member states unite and decide with 26 (out of 27 EU countries) to implement the minimum corporate tax rate.

“I know it’s a sensitive topic in Ireland,” he added.

In recent months, Mr Donohoe has repeatedly warned of the risk to the Irish economy in over-reliance on tech giants’ corporate tax revenues – even for one-off measures to help people with the cost-of-living crisis.

When asked if he was unsure of Ireland’s stance on corporation tax, Mr Tang said: “I’m not sure, but I would be happy to hear that Irish politicians and policy-makers confirm their position. That would be good.”

Also being discussed will be the European Commission’s proposals for an EU-wide withholding tax, and to ask Ireland to commit to an EU directive tackling shell companies, often used to either avoid paying tax on earnings accrued elsewhere or to launder money.

“What does Ireland do, and does Ireland do enough?” the Dutch MEP said, adding that his own country and Luxembourg would also be “in the spotlight” on whether they do enough to promote a fairer tax system.

Mr Tang said that different political groups are united in the idea that tax avoidance and tax evasion should be “tackled very hard” across the EU.

“There’s an initiative at the European level called the ‘Unshell directive’, which takes an aim at shell companies. Is Ireland willing to support that?

“Because these are all ways to stop tax avoidance and tax evasion.

“To tackle tax avoidance, you can’t rely on just the OECD agreement. It requires further initiatives at European level,” Mr Tang added.

“I think the general idea would remain that tax avoidance comes to the detriment of European partners. They make the same arguments in my country: it’s to the detriment of the German and French taxpayers.

“I want Ireland – but also Luxembourg and the Netherlands – to have this pro-European mindset” in relation to tax evasion, he added.

As well as the FISC delegation, the European Parliament’s LIBE committee, which has competencies over data protection, is also due in Dublin next week.

The two committees visiting Dublin in the same week would suggest that concerns remain among EU institutions about Ireland’s ability to manage the tech giants it hosts.

Facebook, Apple and Google have based their European headquarters in Dublin.

“The supervision of big tech demands resources, but are enough resources spent on it, and is it good enough to help?” Mr Tang said.

Incidents of “conflict” between decisions made by Ireland’s Data Protection Commissioner (DPC) and other data protection authorities across Europe are also “concerning”, he added.

The DPC was criticised for proposing a fine of 50 million euro against WhatsApp for breaches of privacy laws, but the fine was increased to 225 million euro after it consulted with its European partners.

Data protection commissioner Helen Dixon recently referred to the long-running criticisms as “becoming old news”, and defended varied decisions as a difference in interpretation of how fines are calculated.

Mr Tang said: “I understand that Ireland has benefited a great deal from foreign direct investment, most notably from the big tech.

“But it’s not a way to lure them into Ireland by offering possibilities for tax avoidance or to lack standards for data protection.”

As a western country that mainly speaks English, that is a “gateway to Europe”, Mr Tang added that “I always think that Ireland will do just fine” without the investment gained from tech multinationals.

“Ireland is one of the richest members of the European Union. Times have changed. I think there’s every reason for Ireland to be self confident.”