Corporate tax rate not under threat, says Noonan

The controversial ‘double Irish’ tax mechanism was never part of the Irish tax code and was not a viable way of building a sustainable economy, says Minister for Finance Michael Noonan.

Speaking at a major tax conference organised by the Institute of International and European Affairs, Mr Noonan, said the ‘double Irish’ created uncertainty about Ireland’s tax system and that is why the decision was taken to abolish it in October’s budget.

The complex tax mechanism was a vital cog in aggressive tax planning by multinationals, such as Apple, that enabled them to avoid paying billions in tax.

The OECD is half way through the base erosion and profit shifting project, which is aimed at eliminating tax avoidance by large companies.

Mr Noonan could potentially benefit from the full implementation of base erosion and profit shifting because it will match profits with centres of substantial economic activity.

In that context Mr Noonan praised the Washington-based Centre for Investigative Journalism’s exposure of the ‘Lux leak’ files, which showed hundreds of companies had used Luxembourg to hide profits to avoid paying corporate tax.

“Ireland has one of the lowest [corporate tax] rates and we do not hide it. It is transparent and laid down by statute,” he said.

However, the minister raised two concerns about the proposed base erosion and profit shifting legislation.

“It can’t disadvantage small countries and it can’t target US companies,” he said.

In response to a question about the latest joint German, French and Italian government’s efforts to agree an EU-wide common consolidated corporate tax base, Mr Noonan said that he had discussed this with the French finance minister, Michael Sapin, when he was in Dublin last Friday.

“There is nothing in there that would cause us concern,” he said.

The finance minister also welcomed speculation that the British government was set to allow the Northern Ireland assembly set its own corporate tax rate.“We would assume they would go to 12.5% or maybe lower.