Ushering in a sea change in Ireland’s corporate tax transparency

Ireland’s lower tax rate effectively allows multinationals to develop heinous tax shelter methods to shift more of their total profits from the EU to Ireland.

Digital Revolution of the Economy

The digitization of the economy continues to create challenges for global taxation. The EU push for digital taxes is to encourage corporations to build trust and commitment for social cohesion and environmental protection.

The EU proposed to adopt the Digital Services Tax to protect the Member’s taxes. This short-term move to resolve the fiscal challenges of the digital economy provides an opportunity to build consensus while the longer-term fiscal approach is resolved.

International Tax Reforms

Some 130 countries have agreed to a deal aimed at improving international tax rules that have been overtaken by the growth of digital trade. The European Commission’s plans have faced very public scrutiny from leading international figures. Many countries Many countries see a value creation mismatch for taxation of digital activities. An increasing number of countries are considering the implementation of the digital services tax.

Silicon Valley suffers a digital tax shock

Traditional sectors pay an average of 23% taxes in the EU. To avoid higher tax burdens, global tech giants like Facebook, Google, Amazon, Apple and other big tech companies set up their headquarters in low-tax countries like Ireland or Luxembourg to preserve more of their profits in the EU. They pay only 8% or 9% in the EU and record benefits.

Status Quo in the Irish company tax regime

Ireland has blocked the EU’s relentless push to end the veto power member states have over EU tax matters. The new rules that will come into force next year would make things difficult for large multinational companies with high international tax burdens. This would also make it difficult for tax havens like Ireland to attract foreign direct investment.

Closing the loop

Although Ireland has veto power on tax matters, it cannot turn a blind eye to tax reforms, especially as some of this revenue escapes the tax net altogether. The digital tax is a tax on income rather than profit, which the big players perceive as selectively discriminatory.

Ireland prepares for new tax regime

Ireland has expressed strong reservations about the European Commission’s plans to tax digital businesses. As outlined by the OECD with global collaboration high on its agenda, Ireland is doing everything it can to protect its periphery and move towards greater transparency and sustainable development.