Irish context for OECD Base Erosion & Profit Shifting (BEPS)

Irish context for OECD Base Erosion & Profit Shif...

On 26 May 2014, the Department of Finance launched a public consultation on BEPS – OECD Base Erosion and Profit Shifting in an Irish Context – what might this mean for the future of Ireland’s tax regime.

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Readers will be aware of the OECD’s ongoing project on Base Erosion and Profit Shifting (BEPS) which was launched in July 2013 in the form of a BEPS Plan with 15 separate actions.

On Monday 26 May 2014, the OECD held an update webcast to outline the state of progress under the Plan which has 7 key deliverables scheduled for September 2014. This update confirmed that the actions under the BEPS plan are progressing more or less in accordance with the ambitious timetable set down by the OECD and participating States for delivery of outputs – some due in September 2014, the remainder by the end of 2015.

Notwithstanding that progress has been made, the final shape or extent of the consensus which may be reached on the many actions remains unclear. Although some sense of the direction of travel may be gained from both the draft discussion documents on 5 actions which have been released to date and the feedback given to those documents, it seems timely for Ireland to take stock of what the BEPS Project and wider international tax developments might mean in shaping Irish tax policy into the future.

The Irish consultation restates Ireland’s commitment to remain an attractive location to do business and to remain competitive internationally in attracting global business. The context for this consultation highlights that the objective of the OECD BEPS project to align taxing rights with substance and activity offers potential opportunities for Ireland to become a hub for centralising international business operations. Remaining competitive will mean that Ireland will also need to protect its tax reputation into the future.

The consultation acknowledges the active engagement of Irish stakeholders in the OECD BEPS project to date - both in direct response to submissions to the OECD and in feedback given in consultations which Irish government has held with various business representative bodies. This public consultation seeks to widen this debate to other stakeholders.

The consultation also seeks to reframe the discussion on Ireland’s tax policy to widen it beyond the immediate horizon of the OECD BEPS project and its specific actions and to take soundings on the matters that Ireland should regard as priorities for the future. The consultation period is 8 weeks long, closing on 22 July 2014.

The 6 questions posed in the consultation cover specific points of current interest under BEPS Plan actions in 2014, Ireland’s regime for taxation of intangible assets and Ireland’s company residence rules. In the more general sphere, respondents are asked to consider whether there are other current international tax proposals of concern to Ireland and what priority areas and future challenges should Ireland address in the process of shaping its future tax regime.

From this balance of questions, it can be seen that the Department of Finance is seeking feedback through the consultation on both the threats and opportunities for Ireland’s tax regime if Ireland is to be successful in remaining a very attractive place to do business  - for both domestic and international owned business.

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