STOP

Recommendations

Info

72 • Fifty Shades of Tax Dodging Financial and corporate transparency Ireland is “maintaining its commitment to ensuring an open and transparent tax regime,” according to the government’s 2014 Road Map for Ireland’s Tax Competitiveness. 701 A September 2015 poll showed that 76 per cent of Irish respondents thought that more detailed reporting by multinational companies would show whether companies were paying the correct amount of tax. 702 In June 2015, the Central Bank warned that a 2016 review of Ireland’s anti-money laundering practices by the international Financial Action Task Force (FATF) would be “quite a challenge”. 703 That warning followed a February 2015 Central Bank review of the financial sector’s anti-money laundering compliance, which found evidence of “incomplete risk assessment” that lacked “thorough analysis”, “nonadherence” to the bank’s own anti-money laundering policies and other shortcomings. 704 The report noted that “the number and nature of issues identified suggests that more work is required by banks in Ireland to effectively manage Money Laundering and Terrorist Financing risk.” 705 Public reporting by multinational corporations The Department of Finance states that Ireland “supports the OECD approach of Country by Country Reporting to Revenue authorities only” in line with Ireland’s “legal commitment to taxpayer confidentiality.” 706 This means that there will be no public access to the information from country by country reporting, and that only companies exceeding a threshold of €750m in annual consolidated group revenues will be included. Ownership transparency A 2015 Central Bank review of the financial sector’s antimoney laundering compliance found that a “sufficient review of customer and beneficial owner verification documentation is not completed or evidenced by branch managers.” 707 A similar review of credit unions found “lack of documented procedures to identify and verify beneficial owners where warranted.” 708 Despite these shortcomings, it is the government’s position that beneficial ownership of companies should be known, and that provisions are already in place (under information exchange agreements) when authorities require this knowledge about companies and trusts. 709 It has not yet been decided within government, at political or public service levels, how it will establish the register required under the 4th EU Anti-Money Laundering Directive, which government department or agency will host the register, or whether the register will be public. 710 Government officials state that Ireland is working towards implementing the Directive into Irish law ahead of the scheduled FATF assessment of the country in 2016. Automatic exchange of information Since 2001, Ireland has had a dedicated unit for “uncovering and confronting the use of offshore accounts by Irish resident individuals.” 711 According to the Revenue Commissioners, the unit has brought in more than €1 billion in additional revenue. 712 Following SwissLeaks, which revealed more than €3.5 billion related to Ireland, 713 in February 2014 the Revenue reported to Ireland’s Public Accounts Committee on its follow-up inquiries. 714 The Revenue stated that it had assessed the risk profiles of 270 corporations in the SwissLeaks files with regard to possible tax evasion, resulting in 33 investigations; and had recovered €4.6m in settlements, including from one corporate case. There were no prosecutions concerning corporate taxpayers. 715 The Department of Finance stated in June 2015 that it would further evaluate the HSBC Bank data to possibly open more investigations. 716 Ireland’s Department of Finance stated in June 2015 that it considers data protection and confidentiality critical to the automatic exchange of information. These, it said, “are typically, although not always, associated with maturity of a tax administration and will be key criteria for Ireland in deciding which partner jurisdictions with whom to exchange information.” 717 Ireland is, therefore, likely to provide information to a very select number of developing countries, if any, in the near future. EU solutions Ireland is “committed to the ongoing work at EU level to deal with tax evasion and avoidance,” the Department of Finance states, 718 but that should take into account the OECD work programme on base erosion and profit-shifting, to avoid a “conflicting approach”. 719 Irish media often depict measures by the EU institutions to curb tax dodging as a threat to the country’s 12.5 per cent corporate income tax rate. 720 Opposition to any EU-wide harmonisation of that lies at the core of Irish government antipathy towards a coordinated corporate tax system, such as the Commission’s proposal for a Common Consolidated Corporate Tax Base (CCCTB). Head of Government and Taoiseach Enda Kenny stated in March 2015: “Ireland has always objected to the proposal that was on the table in respect of CCCTB… If the Commission comes forward with a new set of proposals we will engage with that constructively… but in respect of the proposal that was there, we’ve always said from the very beginning that this is not workable and we object to it.” 721
Fifty Shades of Tax Dodging • 73 Meanwhile, the Commission’s state aid investigation as to whether Ireland’s tax rulings to two Apple subsidiaries constitute state aid that contravenes competition rules continues into the latter half of 2015. The government has said it will do everything it can to “ensure that they [the Commission] have the full information they require,” 722 but that it is confident that there is no state aid rule breach in this case. Finance Minister Michael Noonan stated in June 2015, replying to a Parliamentary Question, that “in the event that the Commission forms the view that there was state aid… Ireland will challenge this decision in the European Courts, to continue to vigorously defend the Irish position.” 723 Global solutions The Department of Finance states that Ireland has taken an active role in the OECD’s Base Erosion and Profit Shifting (BEPS) project and, despite reservations, considers that “the reports are a big step towards addressing problems in the international tax environment.” 724 The government considers the fight against tax avoidance and evasion as a key component of its policy coherence for development strategy, and states that the government intends to play “a strong role in global efforts to bring about a fairer and more transparent international taxation system” 725 Despite this, the Irish government does not favour the establishment of an intergovernmental body on tax, stating that “the current format of the UN Tax Committee, a committee of independent experts, chosen on a broad international basis, is appropriate.” 726 Before the Financing for Development summit in July 2015, Irish Aid stated that the summit “should not lead to institutional proliferation, but rather focus on improving cooperation among existing bodies and ensure that all countries are in a position to fully benefit from increased transparency at international level.” 727 Conclusions Ireland has tackled the loophole that allowed for the ‘Double Irish’ scam, while insisting that the scheme was never Irish but “came about due to mismatches caused by the interaction between the domestic tax rules of Ireland and other countries.” 728 The government is engaging with the OECD and EU on the shape of global corporate tax reform, while striving “to reposition Ireland so as to be best able to reap the benefits, in terms of sustainable foreign direct investment, of a changed international tax landscape.” 729 The government emphasises, as a core national interest, Ireland’s corporate tax competitiveness as a means of winning foreign direct investment (FDI) in a global economy. It has prioritised an Intellectual Property regime for corporations (through a patent box, expanded capital and R&D allowances, a growing tax treaty network) to take advantage of opportunities in the digital economy, while also strengthening its capacity to defend Ireland’s tax base in expected transfer pricing disputes. In February 2015, UN Special Rapporteur on Extreme Poverty and Human Rights Philip Alston, expressed concerns at Ireland’s “range of schemes that look to all the world to be designed to facilitate tax avoidance by huge multinationals in return for a pittance of a reward to Ireland.” Such “policies that give large multinationals a free pass on tax are especially damaging to developing countries” and raise serious human rights concerns: tax policy and fiscal policy are human rights policy, he added. Yet there seems little urgency around the Irish government’s Spillover Analysis (conducted in 2014-15) of any possible impact of Ireland’s tax policy on developing countries, or any meaningful attempts to address developing countries’ call for a truly global tax boy. As things stand, there remains the clear risk identified by tax experts 730 that, without Ireland closing gaps in its corporate taxation and incentives systems, along with its transfer pricing regime, multinational corporations will continue to create or operate aggressive tax dodging schemes from Ireland that reduce their global liabilities and deny muchneeded tax revenues to low-income countries.
Page 1 and 2:
STOP Fifty Shades of Tax Dodging Th
Page 3 and 4:
Contents Glossary 4 Executive summa
Page 5 and 6:
Fifty Shades of Tax Dodging • 5
Page 7 and 8:
Fifty Shades of Tax Dodging • 7 A
Page 9 and 10:
Fifty Shades of Tax Dodging • 9 P
Page 11 and 12:
Page 13 and 14:
Page 15 and 16:
Page 17 and 18:
Page 19 and 20:
Page 21 and 22: Fifty Shades of Tax Dodging • 21
Page 71: Fifty Shades of Tax Dodging • 71
Page 123 and 124:
Page 125 and 126:
Page 127 and 128:
Page 129 and 130:
Page 131 and 132:
Page 133 and 134:
Page 135 and 136:
Page 137 and 138:
Page 139 and 140:
show all

STOP

You also want an ePaper? Increase the reach of your titles

Delete template?

Save as template?