Irish Government calls time on controversial tax arrangement
In the recent Irish Budget, the Irish finance minister Michael Noonan announced the abolition of the controversial ‘double Irish’ tax scheme that has enabled many large US multinationals to dramatically reduce their tax bills.
The Irish Government was under enormous pressure from parties including the US Senate and the EU to stop facilitating multinational international tax planning. Mr Noonan announced that from 1 January 2015 new residency rules will be introduced to require all companies registered in Ireland to also be tax resident. There will be a four year transitional period for existing multinationals operating in Ireland including Apple and Google.
Mr Noonan said:
‘This proactive change will not bring an end to international tax planning; that requires co-ordinated action by all countries. By taking action now and making this change as part of a broader reform of our corporate tax system, we are giving certainty to investors about corporate tax in Ireland for the next decade.’
The Irish Government however staunchly defended their low 12.5% corporation tax rate which has been disparaged by some other EU member states. Mr Noonan was clear that‘the 12.5% tax rate never has been and never will be up for discussion. The 12.5% tax rate is settled policy. It will not change.’