Yahoo Finance Ireland is 'supportive' of OECD review of international tax system
Ireland, long accused of giving enormous tax breaks to multinational companies, said on Friday that it was “supportive” of an OECD examination of global tax rules.
The country’s finance ministry said in a statement that Ireland recognised that changes to the international tax framework were “necessary to ensure that we reach a stable global consensus for how and where companies should be taxed.”
In order to address the tax challenges of the digital era, an OECD grouping of more than 115 countries recently gave the organisation the go ahead to develop four proposals that could significantly alter the global landscape.
The possible changes include the introduction of a minimum corporate tax rate and a rule that would see companies taxed on profits in the jurisdictions where sales are made.
“There are a variety of views at the OECD table and the eventual outcome will need to strike a balance to reflect these differing perspectives,” a spokesperson for Ireland’s finance ministry said.
READ MORE: Effective corporate tax rate in 15 EU countries lower than Ireland
They warned, however, that the “changes must also not disproportionately prejudice small open economies who seek to attract real substantive foreign direct investment.”
Multinational giants like Google, Facebook, and Apple have a huge presence in Ireland, whose 12.5% corporate tax rate is among the lowest in the EU. But in 2016, the EU ruled that the country had provided tax benefits to Apple (AAPL) that amounted to illegal state aid.
These digital behemoths are often accused of booking profits in low-tax jurisdictions, regardless of where the sale was made — and Irish tax laws have been under international scrutiny as a result.
Nobel prize-winning economist Joseph Stiglitz said last year that Ireland was a country competing in a corporate tax “race to the bottom.”
READ MORE: Ireland signs deal with Malta to close ‘single malt’ tax loophole
In 2017, the country was forced to reject a study that claimed it was the world’s largest tax haven.
And over the past decade, Ireland has moved to close a number of loopholes that gave rise to certain tax avoidance structures known as the “double Irish” and “single malt” — which certain companies used to pay single-digit tax rates.
