Ireland's Tax Strategy

Ireland's Tax Strategy

An overview of Ireland's tax strategy in the wake of Budget 2017.

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Review of the corporation tax code

The Minister for Finance has announced the appointment of an independent economic expert, Mr. Seamus Coffey, to undertake a review of the corporation tax code. The review will assess whether the Irish corporation tax code continues to meet international standards, whilst also delivering tax certainty for business and maintaining competitiveness.

The review will focus on the following matters:

  • achieving the highest international standards in tax transparency, including the automatic exchange of information on tax rulings with other relevant jurisdictions, having regard to benefits which may accrue to developing countries from enhancing global tax transparency; 
  • ensuring that the corporation tax code does not provide preferential treatment to any taxpayer;
  • further implementing Ireland’s commitments under the Organisation for Economic Cooperation and Development’s Base Erosion and Profit Shifting (BEPS) project to tackle harmful tax competition and aggressive tax planning; 
  • delivering tax certainty for business and maintaining the competitiveness of Ireland’s corporation tax offering; and 
  • maintaining the 12.5% rate of corporation tax.

Recommendations arising from the review will be made to the minister by the end of June 2017. The Department of Finance may, as required, facilitate a public consultation with citizens, civil society and stakeholders on any or all of the matters under review. 

International Tax Strategy

The minister published Ireland’s International Tax Strategy in conjunction with his Budget 2014 announcement. An initial update on the strategy was published with the Budget 2015 announcement and a further update was published today.

The 2016 Tax Strategy Update confirms the Government’s commitment to minimising the impact of Brexit on Ireland. In that context, it highlighted a number of the taxation measures announced in Budget 2017 which are focused on small and medium enterprises, Irish exporters, entrepreneurship and the agri-food sector. It also signalled that the Minister for Jobs, Enterprise and Innovation will shortly introduce legislation to provide an additional benefit, within the parameters of the OECD “modified nexus” approach, for small companies who wish to avail of the Knowledge Development Box (KDB), which was introduced in Finance Act 2015. The Government also reaffirmed its commitment to the 12.5% rate of corporation tax.

The Tax Strategy Update also reaffirms Ireland’s commitment to maintaining an open, transparent, stable and competitive corporate tax regime. In particular, the paper provides a status update in relation to Ireland’s compliance with the OECD BEPS project and reaffirms that Ireland will continue to take any actions needed to implement the BEPS reports. Countryby- country reporting was implemented in Finance Act 2015 and Ireland signed a Multilateral Competent Authority Agreement in January 2016 to share these reports with other tax authorities. In addition, the independent review of Ireland’s corporation tax code, announced in Budget 2017, will include consideration of any further actions which Ireland may need to take to ensure that it is fully compliant with the OECD BEPS recommendations.

The Government has committed to implementing the third and fourth iterations of the Directive on Administrative Cooperation (DAC), known as DAC3 and DAC4, by the end of 2016. DAC3 deals with the automatic exchange of tax rulings among Member States and DAC4 deals with the automatic exchange of country-bycountry reports among tax authorities.

The 2016 Tax Strategy Update addresses the government’s position in relation to the EU agenda on tax policy matters and confirms that Ireland will continue to engage in relation to EU tax proposals. It confirms that Ireland will implement the measures included in the EU Anti-Tax Avoidance Directive within the agreed deadlines. While Ireland will engage fully in the discussions which will be relaunched later this year by the European Commission in relation to the Common Consolidated Corporate Tax Base (CCCTB) Directive, it will assess whether any outcomes from the process are in the best interests of Ireland. The Government indicated that it does not support initiatives that seek to enforce harmonisation of tax rates, minimum levels of taxation or the inappropriate encroachment of state aid rules into the core Member State competence of taxation.

Taxing Times: Budget 2017 & Current Tax Developments

Taxing Times: Budget 2017 & Current Tax Developments

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