Ireland’s bid to scupper multinational tax plan fails
IRELAND and a coalition of EU allies have failed in a bid to halt talks on a draft multinational tax plan.
The proposal, which would force large corporations to publish the tax they pay in each EU country, has been hamstrung by divisions since it was first proposed in 2016.
Ireland and its allies Cyprus, Czechia, Hungary, Luxembourg, Malta and Sweden lodged a complaint about the draft at a meeting of EU ministers yesterday.
They said they have “ongoing concerns” about a move to use majority voting to agree it, removing the national veto on tax matters.
EU financial services chief Mairead McGuinness said the law concerns company accounts rather than tax, and so can be decided by majority voting under EU treaties.
“The proposal is exclusively a transparency measure, which aims to restore citizens’ trust in the fairness of the tax system,” she told EU ministers yesterday. “The proposal in no way seeks to modify the fiscal rules applicable to companies, nor to enforce fiscal rules at EU or national level.”
The proposal is supported by at least 17 EU countries, including Italy, France, Spain, the Netherlands, Denmark, Finland and Austria. Germany’s position is not yet clear.
Oxfam Ireland CEO Jim Clarken said it was “really disappointing that Ireland voted against this basic tax transparency measure”.
Danish business minister Simon Kollerup said yesterday that it was “about time” large companies were taken to task over their tax affairs.
“Multinational companies have the resources to engage in aggressive tax planning and tax evasion. We need to create incentives for more responsible tax conduct.”
But Ireland and its six allies, backed by Estonia and Croatia, fear that using majority voting in this case could set a precedent for future tax laws.
The minister of state for trade promotion, Robert Troy, told his EU counterparts yesterday that rules for multinationals should be left to international tax experts, such as the Paris-based Organisation for Economic Cooperation and Development (OECD).
The rules, if agreed by MEPs, would apply to companies operating in the EU – even if headquartered abroad – with a consolidated global turnover of more than €750m.
Companies would have to make public information such as net turnover, pre-tax profits, accumulated earnings and tax paid in each EU country in which they operate.
Similar rules are already in place for banks and for oil, gas, mining and logging companies, and the OECD published non-binding standards in 2015.
Meanwhile, the Financial Times reported that UK Chancellor Rishi Sunak is set to raise corporation tax from its current rate of 19pc when he unveils his budget next week.
Mr Sunak’s budget will have to respond to a massive rise in Covid-related spending over the last year, and cope with an ongoing lockdown.
Officials working on the budget told the Financial Times that Mr Sunak will keep business taxes competitive with G7 allies such as the US, Canada, Germany and France.
US president Joe Biden has announced his intention to raise corporate tax from 21pc to 28pc.