By Eamon Quinn
The Government’s proposals to bolster defences against an international onslaught on the Irish tax regime may inadvertently entangle SMEs, according to a leading tax expert.
Brian Keegan, director of public policy at Chartered Accountants Ireland, told the Irish Examiner he was concerned the latest proposals from Finance Minister Paschal Donohoe on transfer pricing will entrap SMEs, when the principal target of international reforms is the amount of tax paid by multinationals.
Mr Keegan first raised his concerns a year ago, following the publication of a report by economist Seamus Coffey for the Department of Finance on changes required to bolster the tax regime.
Mr Keegan said proposals regarding SMEs and transfer pricing were “still there” in a 40-page report the department published yesterday on ways for Ireland to implement anti-tax avoidance directives and act on the recommendations of Mr Coffey’s review.
Presenting the report, entitled Ireland’s Corporation Tax Roadmap, Mr Donohoe said the measures would be phased in over the next two finance bills to make sure the tax regime is “robust” at a time of unprecedented change to global tax systems.
He said the plans take account of reforms promoted by the Organisation for Economic Cooperation and Development (OECD) and the EU, amid the huge US corporation tax cuts ushered in by president Donald Trump this year.
“The Irish Government and I are certain that criticism can best be countered by demonstrating what we have done, what we are doing, and what we will do over the next couple of years to agree and implement robust new international tax standards,” said Mr Donohoe.
Following the European Commission’s 2016 the 2016 EU Commission ruling that Ireland collect at least €13bn in back taxes from Apple, the country has been at the forefront of world media headlines claiming claims it facilitates aggressive or ‘sweetheart’ tax deals with multinationals.
Previous finance ministers started the process of phasing out tax arrangements hugely beneficial to multinationals such as the ‘double Irish’.
Mr Donohoe, however, said the country has “not got our due credit” in the past for reforming tax codes in line with OECD and EU directives.
He said Ireland would maintain its strong opposition to EU proposals to levy a 3% digital tax on some of the largest online giants, and suggested the Government had garnered increased support from Nordic and Baltic countries for the fightback.
The proposal advanced earlier this year by tax commissioner Pierre Moscovici envisages levying a 3% tax on turnover of large digital firms.
The proposal has been criticised by many analysts who say it would be better for the EU to develop a proper digital tax with international agreement.
Mr Donohoe reiterated plans to inject €500m next year into a so-called rainy day fund.
Any large increases in corporation tax revenues would not go to fund additional spending and the Government is not planning on the basis that corporation tax revenues would run far ahead of other tax heads, he said.
Central Bank governor Philip Lane yesterday warned policymakers about relying on surging corporation tax revenues to fund spending, saying “some part of these revenues should be categorised as a windfall”.
From our friends over at the : Irishexaminer.com
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