‘We have no problem with Irish tax system’ – OECD

But profit-shifting project chief warns that ‘perceptions are hard to change’

IRELAND is playing by the rules and implementing new measures to prevent multinational tax avoidance, according to the OECD.

Pascal Saint-Amans, the director for tax policy and administration at the OECD, said that the Paris-based body currently had no problem with Ireland and its tax relationship with international companies.

However, he said that from a reputation point of view, the country was still facing challenges as “perceptions are hard to change”.

It comes just days after a Dutch MEP accused Ireland of tax piracy and stealing the tax base from other countries.

“I would say, reputation wise, Ireland is still facing challenges as perceptions are hard to change, though progress is real and substantial,” Mr Saint-Amans told the Irish Independent.

But he said the decision taken by the previous government not to end the so-called ‘Double Irish’ until 2020 weakened the country’s position, rather than strengthening it.

In Budget 2015, just over a year after Ireland was branded a tax haven by two high-profile US senators, then finance minister Michael Noonan announced the phased closure of the ‘Double Irish’, which allowed companies to shift profits to tax havens, in one of the biggest changes to Ireland’s corporate tax structure since the 1990s.

The new laws ending the loophole took effect three years ago, but there was a transition period for existing companies until 2020.

“I would say that the grandfathering of the ‘Double Irish’ would actually weaken Ireland rather than strengthen it,” Mr Saint-Amans said.

“It keeps some [elements] of the regime which are not tolerated by the public, or public perception, a bit too long.

“That is more a problem than having it as a safeguard for two years. The decision was taken, can you come back to it? I don’t know. I’m not sure that was the smartest decision.” Mr Saint-Amans (inset) – who has spearheaded the OECD’s base erosion and profit shifting (Beps) project, a co-ordinated international approach to combat tax avoidance by multinationals – said Ireland was implementing the Beps measures.

“Ireland has implemented the Beps project, so I think it’s fine,” he said. “Today, I wouldn’t say we have a problem with Ireland on this or that.”

Mr Saint-Amans also said that the surge in corporation tax receipts here in recent years ias sustainable. CT receipts have almost doubled since 2014 to €8.2bn and now account for 16pc of total tax receipts.

“I would say that the reason for the growth of Irish corporate income tax may be linked, and significantly so, to the recent international tax developments,” Mr Saint-Amans said.

“We had a good understanding with the Irish authorities, Michael Noonan, to say if you want to remain attractive and sustainable with the 12.5pc rate, you need to implement the 12.5 and get rid of all the schemes and facilities to reduce the rate by shifting profits to zero tax jurisdictions.

“As a result of Beps, you will have seen some on-shoring of activities which do explain the bulging of the tax base of companies in Ireland. Is it sustainable? Yeah, sure.”