Budget 2017: New report plans to avoid corporate tax potholes
Seamus Coffey, the UCC economist, has been appointed to write a key report on the corporation tax aimed at keeping Ireland’s tax regime out of the international headlines.
Finance Minister Michael Noonan announced that the Government had commissioned the new report as a key part of the 2017 budget, saying that the headline 12.5% rate wasn’t under threat.
Mr Coffey, who is also a member of the Irish Fiscal Advisory Council, will report on how Ireland can meet new international standards and to ensure the country’s tax regime “does not provide preferential treatment to any taxpayer,” said Mr Noonan. Ireland has been embroiled in a number of unwelcome controversies surrounding its tax regime in recent years.
This culminated in a ruling by EU Competition Commissioner Margrethe Vestager that Ireland must collect €13bn in back taxes from Apple after the Commission ruled the phone giant benefited from favourable tax rulings. The Government has vehemently denied providing any favours to Apple and has appealed the ruling.
The Irish Examiner understands the report, which is to be delivered by late spring next year, is likely to investigate ways Ireland can insulate its so-called ‘Knowledge Development Box’ from future potholes. The Knowledge Development Box is a key part of the tax regime to help encourage multinationals to shift their intellectual property rights into the country.
Mr Noonan said that the Government “will ensure our corporate tax regime remains fair but competitive in the future”.
Mr Noonan announced a range of tax changes designed to help some business groups worst affected by the huge drop in the value of sterling after the UK decided to quit the EU in its June referendum. He said that the best outcome for Ireland would be if the UK remains part of the common market and that there be no setbacks for “the common economy on this island”.
The budget extends a tax incentive for some foreign workers who come to work in the State, called the Special Assignee Relief Programme, to the end of 2020. Separately, he said small businesses would benefit from changes in the Foreign Earnings Deduction to the end of 2020.
He said farmers had been among those worst affected by Brexit.
The so-called Farmer’s Flat-Rate Addition scheme which compensates unregistered farmers for Vat will be rise to 5.4%, at a cost to the exchequer of €9m. He said the Government through the Strategic Banking Corporation of Ireland would offer loans below 3% to help farmers reduce borrowing costs.
