‘No firms hit by tax clampdown’

Not a single company has contacted the tax authorities to say they have been affected by changes announced in the budget as part of Finance Minister Michael Noonan’s clampdown on international tax avoidance.

In October’s budget, Mr Noonan included a measure that required any company incorporated in Ireland to be tax resident either in this country or another jurisdiction.

Multinationals had been exploiting a loophole in the Irish tax system that enabled them to incorporate companies here that were not tax resident in any other state.

In response to a parliamentary question from Michael McGrath, Fianna Fáil’s finance spokesman, Mr Noonan said no companies had been affected by this change.

“I am informed by the Revenue Commissioners that they have not, to date, been advised by any company that is or will be affected by the change in residence rules as to where it is actually resident following the announcement of the change in the budget,” he said.

Mr McGrath said he was “amazed” that not a single company had been hit by the rule change.

“I am surprised that not a single company has made contact with the Revenue to signal that it is affected by the change. I would certainly like to see multinationals pay more tax but we need to be cautious about making any changes that will disadvantage Ireland in the highly competitive drive for multinational jobs,” he said.

Mr McGrath said that due to the generous warnings given to companies, they have been able to find new methods of minimising their tax leakage.

“Given that existing companies were given 15 months notice of the change in residency rules, I wouldn’t expect the new rule to have much of an impact at all on existing companies or indeed on the amount of corporation tax being paid in Ireland.

“The reality is that, in response to the budget change, multinationals are busy redesigning their tax structure to ensure that the amount of corporation tax paid continues to be minimised.”

Mr McGrath added: “Ultimately, under the current international framework, the multinationals will make sure that the profits end up in companies which are tax resident in countries where little or no corporation tax is levied.”

Credit: Irish Examiner