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Ireland Updates International Tax Strategy

Thursday, October 12, 2017

The Irish Government has published an updated version of its International Tax Strategy, which provides an overview of the steps taken to meet international standards and sets out the Government's position on global reform efforts.

In his foreword to the Tax Strategy paper, Finance Minister Paschal Donohoe said: "In Ireland we have a stable tax regime. We have a competitive 12.5 percent tax rate, which is not going to change. We have a transparent tax system with a broad base, which is designed for businesses that want to innovate and create employment."

"By adopting and sticking to a corporation tax system that is sustainable and which meets the highest international standards, we are in a position to offer certainty. With the current changing environment internationally, certainty has become a valuable commodity. Ireland's reputation for stability has been earned over a long period of time, and I intend to plan for the future in that same spirit."

The Tax Strategy paper emphasized Ireland's continued commitment to the BEPS process. It explained that Ireland was among the first countries to implement country-by-country reporting, and to sign the multilateral implement for implementing new standards on treaty shopping and dispute resolution. Ireland is also participating in the OECD's Task Force on the Digital Economy, and was assessed by the OECD's Global Forum on Transparency and Exchange of Information for Tax Purposes to be compliant.

Turning to the tax reforms being pursued at an EU level, the document stated that EU member states this year approved new anti-avoidance rules for targeting hybrid mismatches and bringing EU law more closely into line with the OECD's BEPS recommendations. Work is also underway in Ireland on transposing the new directive on administrative cooperation, which will ensure that tax authorities can obtain access to relevant information prepared by financial institutions as part of their anti-money laundering requirements.

Ireland will implement the new EU directive on dispute resolution mechanisms by the June 2019 deadline.

The Tax Strategy also noted that EU member states are now discussing the taxation of the digital economy in earnest. It stressed that there must be global consensus on this issue, and that Ireland does not support any move away from this consensus that would result in double taxation or increased uncertainty.

The Tax Strategy likewise made clear that Ireland "will continue to insist that all tax measures at EU level require unanimity before they can be agreed, reflecting the fact that tax is a key member state competence." European Commission President Jean-Claude Juncker recently suggested that the method for voting on key tax issues shift from unanimous voting to qualified majority voting.

The report explained: "Tax transparency is necessary worldwide, and not just within the EU. Compliance with international tax transparency standards is one of the key issues being considered by work underway at both EU and OECD level to identify non-cooperative jurisdictions. Ireland is supportive of this work which should play an important role in encouraging the adoption of the international standards in transparency across the globe."

The Tax Strategy paper also included the outline of the Government's new consultation on the findings of the recent review into Ireland's corporation tax code.

The consultation canvasses views on the implementation of the Anti-Tax Avoidance Directive, and on the implementation of Actions 8, 9, and 10 of the OECD BEPS package (which aim at aligning transfer pricing outcomes with value creation). It is also interested on the effects of a suggested move to a territorial corporation tax base, and of a review of Schedule 24 of the Taxes Consolidation Act, which provides relief from double taxation of foreign income.

The consultation will close on January 31, 2018.