The international community’s pressure is mounting on the taxation of multinationals; and it is starting to result in some significant changes to existing taxation structures.
Last week, in delivering the Budget, the Irish Finance Minister announced that the government would begin phasing out the ‘double Irish’ structure. As members will be aware, the double Irish allows firms with operations in Ireland to make intellectual property royalty payments to a separate Irish-registered subsidiary that is resident in a country that has no corporate income tax.
This change takes effect from 1 January 2015 for new companies, but existing companies have a generous transition period to the end of 2020.
However, despite the positive sentiment behind this face-saving announcement, there is still a major aspect of the Irish tax system that remains of international concern: the very low 12.5% company tax rate that will remain untouched.
It is clear that it will take much more pressure from the international community to change that rather large carrot.
The Tax Institute will continue to be involved in BEPS issues here in Australia, including with respect to the flow-on effects from activity in other jurisdictions. I encourage members who would like to discuss this further to be in touch (firstname.lastname@example.org)
Robert Jeremenko CTA