Global Tax Alert | 27 May 2014

Ireland launches public consultation regarding corporate tax regime

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Overview

On 27 May 2014, the Irish Department of Finance launched a public consultation process to evaluate the competitiveness of Ireland’s corporate tax regime.

Given the ongoing Organisation for Economic Co-operation and Development (OECD) Base Erosion Profit Shifting (BEPS) process and mindful of the desire to remain competitive, the Irish Minister for Finance wishes to consider options for Ireland’s tax system to best respond to a changing international tax environment. Ireland is fully engaged in the OECD BEPS process. This consultation sits within the ongoing evaluation process undertaken by Ireland to maintain its competitive position.

The consultation process will supplement processes involving industry and professional bodies. It will provide an opportunity for all stakeholders to bring forward suggestions for improvement to Ireland’s regime with a view to preserving and creating employment with a view to sustaining investment and growth.

The consultation also signals legislating for improvements to Ireland’s regime later this year through Budget 2015. This will help position Ireland more favorably as companies evaluate investment decisions through 2014 and 2015.

The consultation will run for eight weeks from 27 May through 22 July.1

Scope of consultation

The aim of the consultation is to facilitate considering options for Ireland’s tax system in responding to the changing international tax environment.

In addition to the overall BEPS Action Plan (with particular emphasis on the 2014 Actions), views are sought on a variety of pertinent areas including other international tax proposals of concern to Ireland, competitiveness proposals with intangible assets highlighted as an example of one area of relevance and tax residence rules.

Reaffirmation of key policy messages

The consultation paper reaffirms some key policy messages around rate, regime and reputation:

  • The tax rate is settled policy with 100% commitment to the 12.5% tax rate. This will not change.
  • The competitiveness of Ireland’s regime is evaluated on an ongoing basis - Ireland wants to continue to play fair in the competing for mobile foreign direct investment and play to win.
  • Increasingly tax reputation is a key factor in attracting mobile foreign direct investment.

The Minister is examining ways to enhance Ireland’s regime and protect Ireland’s reputation as part of preparations for Budget 2015.

The direction of travel in the OECD BEPS project involves greater alignment of taxing rights and economic activity. The consultation paper reiterates that the OECD BEPS project presents opportunities for Ireland as a hub for the centralization of international business operations. Indeed, Mr. Pascal Saint-Amans is on record highlighting the potential gains for Ireland.

Next actions

EY will continue to engage with the Department of Finance on Ireland’s competitiveness agenda.

Endnote

1. Further details can be viewed at [http://www.finance.gov.ie/news-centre/press-releases/department-launches-beps-base-erosion-and-profit-shifting-consultation].

For additional information with respect to this Alert, please contact the following:

Ernst & Young (Ireland), Dublin
  • Kevin McLoughlin
    +353 1 475 0555
    kevin.mcloughlin@ie.ey.com
  • Joe Bollard
    +353 1 475 0555
    joe.bollard@ie.ey.com
Ernst & Young (Ireland), Cork
  • Frank O’Neill
    +353 21 480 5700
    frank.oneill@ie.ey.com
Ernst & Young (Ireland), Limerick
  • John Heffernan
    +353 61 319 988
    john.heffernan@ie.ey.com
Ernst & Young (Ireland), Waterford
  • Paul Fleming
    +353 51 872 094
    paul.fleming@ie.ey.com
Ernst & Young LLP, Irish Tax Desk, New York
  • Karl Doyle
    +1 212 773 8744
    karl.doyle@ey.com

EYG no. CM4447