Ireland to end Double Irish tax scheme in 2020

Foreign companies looking to take advantage of Irish corporate tax laws will be unable to do so from the start of 2015, with the total phase out of the loophole to arrive in 2020.
Written by Chris Duckett, APAC Editor on

A loophole in Irish tax laws that has allowed the likes of Google, Facebook, and Apple to avoid paying corporate taxation is set to be phased out by the Irish government at the end of 2020, Ireland's Finance Minister Michael Noonan said in his Budget speech.

The change will force companies that are registered in Ireland to become tax residents in the country, and will be introduced for new companies from the start of next year, with existing companies given five years' grace.

"Aggressive tax planning by multi-national companies has been criticised by governments across the globe, and has damaged the reputation of many countries," Noonan said in his speech.

"This proactive change will not bring an end to international tax planning; that requires coordinated action by all countries."

A coordinated effort to tackle transfer pricing and profit shifting has begun under the auspices of the G20 group of nations and the OECD, the latter of which has been tasked with developing a set of measures to address base erosion and profit shifting (BEPS).

In a communique developed by the G20 in February, the group said that by the time of its November meeting in Brisbane, member nations would start to "deliver effective, practical, and sustainable measures" to combat transfer pricing. Ireland is a member of the G20 through its membership in the European Union.

"Profits should be taxed where economic activities deriving the profits are performed and where value is created," the communique stated. "We are committed to a global response to base erosion and profit shifting based on sound tax policy principles."

At the time, Australian Treasurer Joe Hockey said the standard would enhance transparency and reduce opportunities for tax evasion and avoidance.

In a time of declining tax receipts, governments of the developed world are looking for ways to stem the financial loss.

Despite taking in AU$6.1 billion of revenue for the year until the end of September in Australia, Apple only paid AU$36 million in tax. Similarly, Google has only paid $16 million to the UK tax authority, HM Revenue and Customs, on turnover of $18 billion between 2006 and 2011.

Google chairman Eric Schmidt said in late 2012 that the company is simply engaged in "capitalism".

Companies known to make use of Double Irish tax arrangements include Apple, Google, Facebook, Twitter, IBM, GE, Oracle, Microsoft, Yahoo, and Adobe.


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