Give Google high-flyers f lat tax rate of just 30%

How Government planned to hand execs thousands in cuts... with no upper limit

THE Government considered a special tax regime that could have allowed thousands of highly paid executives in large multinational companies to pay a flat rate of just 30% in tax.

However, the plan – which was designed to be one of the most generous tax incentives in Europe – was abandoned following advice from the attorney general.

The legal advice to the Department of Finance suggested it could fall foul of European Union rules on state aid.

Full details of the proposed regime have not been made public before and the department said the idea came about as a result of a ‘brainstorming’ session. Multinational tax has been a thorny issue for a number of years, with Ireland in dispute with the EU over €13bn in uncollected tax from Apple.

More than 1,000 Foreign Direct Investment companies have made Ireland the hub of their European operations. Mainly involved in information and communications technology, social media, pharmaceuticals and finance, they include such big names as Google, HP, Apple, IBM, Facebook, Linkedin, Twitter and Pfizer.

Multinationals employ more than 210,000 people here.

However, plans for further preferential tax treatment for the top employees of multinationals and large tech firms who base themselves in Ireland would likely have been a political hot potato.

The scheme would have created a large group of people in a tax system different to the rest of the country for up to five years each.

It could have applied to up to 5% of a company’s workforce in return for their employer creating ten jobs per beneficiary.

An internal submission said: ‘The assignee would have paid either a flat rate of tax of 30% or an effective rate of tax of 30% on salary in excess of €75,000.

‘There would have been no upper salary limit. A maximum of 5% of a company’s workforce could avail of the relief.’

The department said it would have been managed and overseen by the IDA, while the Revenue Commissioners would look after the granting and administration of the tax relief. The submission said this scheme was the ‘preference’ of the department but it had been scuppered following discussions with the attorney general.

‘Advice was received that the new proposal has the potential to raise state aid issues,’ it said.

‘The proposed requirement to include IDA certification of the jobs created after three years and the mandatory nature of the requirement for job creation could result in the scheme being considered state aid rather than as a taxation measure.’

The scheme was proposed ahead of Budget 2015 as part of a review of a separate incentive scheme known as Sarp, or the Special Assigned Relief Programme.

Sarp is a smaller-scale scheme that allows for 30% of income earned above €75,000 to be exempt from tax along with tax-free allowances for school fees and one trip home a year.

A cap on the scheme has just been introduced by the Department of Finance after the amount claimed under it doubled in the space of a year, even while the number of jobs it created stalled.

This year’s ministerial submission explaining in detail why removal of the cap was needed has been withheld under FoI by the department.

It said its release would be ‘contrary to the public interest’ before the Finance Bill was enacted.

Offer applied to those on salaries of €75k or more

A large group in different tax system for five years