DUBLIN: The international tax environment is still too unsettled for one to predict how any changes taking place will affect the State’s attractiveness for foreign direct investment, according to outgoing chairwoman of the Revenue Commissioners Josephine Feehily.
Feehily said the ability of corporations to shift their profits between jurisdictions would be “severely constrained” if the type of changes now being worked on by the OECD’s Base Erosion and Profit Shifting (Beps) project were put into effect.
However, the state, with its corporation tax policy of having a broad base and a low rate, would be able to compete internationally “if the field is level”. So one of the key issues would be to ensure that there was a level playing field globally.
A crucial aspect, therefore, of any new global regime would be the mechanisms that were put in place to ensure countries did not pay lip-service to the new rules, she said.
Referring to the so-called “double Irish” tax structure, which has caused great controversy, Feehily said that the OECD’s Pascal Saint-Amans had often pointed out that “a single Irish is not too bad”.
The State, with its 12.5 per cent corporation tax rate, has a strong position from which to compete. It is possible that the amount of profit that is being booked in the state by multinational corporations (MNCs) with regional headquarter operations here could be reduced but, Feehily said, the corporations concerned tend to have substance here and have not indicated any desire to leave.
“At the end of the day, Ireland is interested in the jobs these companies provide,” as well as their spending in the economy and the tax they pay. “The environment is still too unsettled to predict what the final shape will be.”
One of the great changes that occurred during her five years at the helm was the growth in the flow of information between the Revenue and other organisations here, and between the State and other jurisdictions. It is, she said, becoming increasingly difficult for people and corporations to conceal income from the Revenue.
While the tradition had been for customs agencies to co-operate internationally, and for tax administrations to operate on a national basis, the latter would soon be outdoing the former in terms of the organised exchange of information.
