Harris: Ireland has ‘nothing to fear’ from EU tax proposals

Minister of state stresses taxation rates remains a matter for member states

Ireland has “nothing to fear” from European proposals to tackle multinational tax avoidance, the Minister of State at the Department of Finance Simon Harris said on Tuesday as EU finance ministers rubber-stamped new rules on the automatic exchange of information on bank accounts and pledged to introduce new standards on “patent boxes”.

Mr Harris said Ireland’s position had been strengthened by the action in the recent budget that closed the Double Irish tax loophole, but stressed that taxation remained a member-state competency.

“Ireland has nothing to fear. [With] the process we’re involved in both at an international OECD level and with conversations in the EU, they have to recognise the reality that . . . the actual setting of tax is a matter for the member state.”

Pressure

He was speaking before the latest wave of revelations on the Lux leaks scandal which are likely to intensify pressure on the EU to take action on aggressive tax planning.

Earlier, at an Ibec breakfast briefing in Brussels, European Commission secretary general Catherine Day noted that changes to taxation at EU level required agreement from all EU member states. Asked about the European Commission’s recent proposals on taxation, she said that while there was room for EU co-operation in terms of certain tax practices, in other areas agreement was still needed by member states.

“Nothing has changed in the treaty. Every member state has the right to either say Yes or to say No, and that has not changed, so I think that has traditionally made it very difficult to get agreement on tax matters,” she said. “The basic parameters haven’t changed. There can only be agreement on tax matters when everybody agrees.”

Taxation is one of a number of EU policy areas on which unanimity between member states is required, although the EU-wide proposal for a Financial Transactions Tax (FTT) proceeded through the EU system using a so-called enhanced cooperation procedure, which allows 11 member states to move forward with legislation.

At yesterday’s Ecofin meeting of finance ministers, the 11 countries backing the FTT, including Germany and France, failed to reach agreement on the tax, which aims to levy certain financial transactions.

Patent boxes

Also under discussion were patent boxes – intellectual property devices that allow companies to reduce the tax paid on activity derived from patented activity – following an agreement between Germany and Britain last month on new standards for the device.

Germany had been strongly critical of Britain’s use of the measure, prompting the UK to consider new rules on how the tax is calculated, which would ensure that the tax break is linked to actual economic activity in the member state concerned.

The Irish Government announced in the past month it was considering introducing its own form of “knowledge box.” Mr Harris yesterday said he welcomed the proposed new standards for patent boxes, but added that it was important the rules should not disadvantage smaller countries.