Cor­po­rate tax:

Tech gi­ants and other multi­na­tion­als could soon face global min­i­mum levy PwC pre­vi­ously de­scribed mea­sures as ‘a mat­ter of con­cern for Ire­land’

The Irish Times - - Front Page -

OECD pro­pos­als to tax large multi­na­tion­als will cause con­cern in Ire­land.

Tech­nol­ogy gi­ants such as Face­book and Ap­ple, and other large multi­na­tion­als, could soon face a global min­i­mum level of cor­po­rate tax­a­tion un­der new pro­pos­als from the Or­gan­i­sa­tion for Eco­nomic Co-op­er­a­tion and De­vel­op­ment (OECD), even if they have suc­cess­fully and legally shielded their prof­its in tax havens. The pro­pos­als are likely to be greeted with some ner­vous­ness within Govern­ment.

The Paris-based OECD called yes­ter­day for the in­tro­duc­tion of a safety net to en­able home coun­tries to en­sure their multi­na­tion­als can­not es­cape tax­a­tion, even if other coun­tries have of­fered them ex­tremely low tax rates.

The pro­pos­als con­sti­tute the sec­ond part of a re­view of global tax pol­icy by the in­ter­na­tional or­gan­i­sa­tion, which over­sees global co-or­di­na­tion of taxes. The OECD last month pro­posed that gov­ern­ments should tear up a cen­tury of tax his­tory by al­low­ing coun­tries to tax op­er­a­tions in their ju­ris­dic­tion even if com­pa­nies have no phys­i­cal pres­ence there.

PwC pre­vi­ously flagged that these mea­sures are “a mat­ter of con­cern for Ire­land”.

Dig­i­tal avoid­ance

Ac­cord­ing to tax pol­icy leader Peter Reilly, “One of the things we have is the 12.5 per cent rate and we don’t want that eroded in any way . . . If the min­i­mum tax is set at 15 per cent, with no de­duc­tions for re­search and de­vel­op­ment or other in­cen­tivised ac­tiv­i­ties, that would be very bad news for Ire­land.”

The OECD is now con­sult­ing on this sec­ond set of pro­pos­als, on set­ting a global min­i­mum cor­po­rate tax level.

To­gether the two pro­pos­als aim to elim­i­nate the huge ad­van­tages some com­pa­nies en­joy by shift­ing prof­its around the world to min­imise their tax bills – a strat­egy that has be­come com­mon among those in­volved in dig­i­tal tech­nolo­gies. The pro­pos­als would also re­duce the in­cen­tives for coun­tries to lower tax rates in an effort to at­tract such busi­nesses.

Min­is­ter for Fi­nance Paschal Dono­hoe said he wasn’t con­vinced and re­mained cau­tious about the pro­pos­als be­ing put for­ward yes­ter­day.

None­the­less, he added: “Change is com­ing. That will mean change for Ire­land, be­cause it is in our very long-term in­ter­est to be in­side the model for global tax re­form.”

The pro­pos­als would not ap­ply only to tech gi­ants such as Face­book, Ap­ple, Ama­zon, Net­flix and Google, but also to other multi­na­tion­als that make sig­nif­i­cant sums from in­tan­gi­ble as­sets such as brands.

The OECD said: “A min­i­mum tax rate on all in­come re­duces the in­cen­tive for tax­pay­ers to en­gage in profit-shift­ing and es­tab­lishes a floor for tax com­pe­ti­tion among ju­ris­dic­tions.” – Copy­right The Fi­nan­cial Times Lim­ited 2019

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