In a statement published in response to the EU Commission’s anti-tax avoidance proposals announced today, KPMG has said the measures should not undermine and may enhance the attractiveness of Ireland’s 12.5% corporation tax regime.
KPMG said the proposals will require the unanimous support of all EU Member States to become law and noted that Ireland’s taxation laws are already highly compliant with many of the proposals such as those on increased transparency, patent boxes and ‘anti-hybrid’ measures. In effect, the proposals are designed to streamline the standards of Member States.
Commenting on the announcement, Conor O’Brien, Partner and Head of Tax at KPMG in Ireland, said: ‘The EU Commission’s Anti-Tax Avoidance proposals issued today should not undermine and may enhance the attractiveness of Ireland’s 12.5% corporation tax regime. EU law guarantees that Member States have the right to set their own tax rates and this is in no way called into question by the proposals.
‘Corporation tax regimes in some other countries have sometimes been based on opaque rulings and special regimes. These types of regimes are becoming increasingly unacceptable to international policy makers and will have to be reformed while the Irish regime continues to be “best in class” – a single low rate of corporation combined with an EU/OECD compliant Knowledge Development Box, transparent rules, companies with substance, OECD compliant transfer pricing rules, and so on.’
In addition, other proposals such as improved dispute resolution procedures are likely to be widely regarded as sensible reforms deserving of support. For proposals involving important aspects of corporation tax policy, such as interest deductibility, there is unlikely to be unanimous support for a complete surrender of national sovereignty.
‘At this juncture it is difficult to envisage any likely outcome of the process that would be other than neutral or positive for Ireland,’ added Conor O’Brien.
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