Irish tax changes may cost U.S. groups billions

Tue Oct 14, 2014 11:23am EDT
 
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By Tom Bergin

LONDON (Reuters) - Ireland's plan to close a "Double Irish" tax loophole could cost U.S. companies including Apple and Google billions of dollars, although a new break and pressure to tackle tax avoidance elsewhere means they are unlikely to decamp.

Analysts and tax advisers predict that corporations which need access to the EU's 500 million consumers will find it difficult to set up equally effective schemes in other member states as Brussels investigates arrangements that involve paying minimal tax rates.

"The question is where do you go to? There's nowhere else in the European Union. It's just getting too hot," said George Bull, head of the tax practice at advisory group Baker Tilly.

Ireland has been an attractive base for U.S. multinationals for decades, thanks to a tax regime which allows companies to channel profits made in their major markets through the country and into tax havens, paying little tax along the way.

Following pressure from the United States and EU, the Dublin government said on Tuesday it planned to change a rule underpinning this system which allows a company to be registered in Ireland but not resident there for tax purposes.

This change aims to shut down "Double Irish" schemes, so-called because they involve multinationals setting up two Irish subsidiaries. But with the government anxious not to lose the jobs that multinationals have brought to Ireland, Finance Minister Michael Noonan said firms already operating such schemes would have until 2020 to comply with the new rules.

In his budget, Noonan also announced changes to the intellectual property tax regime in the hope of keeping Ireland an attractive destination for business.

International anger about corporate tax avoidance has made the Group of 20 biggest economies rethink international tax rules. It has also prompted EU investigations into tax deals between some member states and big companies.   Continued...

 
Apple Operations International, a subsidiary of Apple Inc, is seen in Hollyhill, Cork, in the south of Ireland May 21, 2013. REUTERS/Michael MacSweeney