Changes in Irish Tax Could Cost Billions
Tax advisers and analysts predict that companies, which require access to the 500 million consumers in the European Union, will find it difficult to establish schemes that are equally effective in other member states as arrangements are being investigated by Brussels that involve paying tax rates that are minimal.
One advisory group on tax practice said there was no other place in the EU that companies could turn to.
Ireland has been for some time an attractive place for U.S. multinationals thanks to its tax regime that allows businesses to channel their profits made in the major markets through the country to tax havens while paying little tax.
After receiving pressure from the EU and the United States, the government in Dublin said Tuesday it was planning to change the rule that underpins the system that allows a business to register in Ireland but not have a domicile there for tax purposes.
The change is aiming to close the schemes referred to as Double Irish, called that due to involving multinationals establishing 2 Irish subsidiaries. However, with the government anxious over not wanting to lose jobs that the companies have brought to the country, Michael Noonan the Finance Minister said the companies that are already operating the schemes would be able to have until 2020 to comply with new regulations.
Noonan, in his budget, announced changes to the tax regime for intellectual property tax in hope of keeping the country an attractive destination for companies around the world.
International anger over the corporate tax avoidance made the 20 largest economies rethink the tax rules internationally. This has also prompted members of the EU to investigate tax deals amongst some member states and large companies.
These changes by Noonan are the most recent in a number of international attacks on the tax structures used in order to move profits into different tax havens.
Ireland has not released a list of businesses that are registered in Ireland but are not tax residents of the country, said a spokesperson for the country’s tax authority. Therefore, it is difficult to determine the amount of income that will be affected by the changes.
However, comments and filings from Apple, Adobe Systems, Yahoo and Google show all four have companies registered in Ireland that are not a tax resident of the country.
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