French presidential candidate Emmanuel Macron has the Irish regime in his sights as he will push for tax harmonisation among eurozone states if he wins this Sunday's French election.
Mr Macron explicitly mentioned Ireland as he insisted the gap in tax systems between EU member states would have to be reduced in the coming years.
Speaking to RTÉ News, Mr Macron said: "As for Ireland, we do know today that that's the bias for a lot of corporates, that it's bias for a lot of sectors and especially the digital sectors." Mr Macron says he intends to lower France's corporate tax rate to the EU average of around 25pc - twice the current rate in Ireland.
Last night, his senior economic advisor Clément Beaune told the Irish Independent that Mr Macron believes "if we share a currency and economic integration then we have to share rules about social and systems including harmonisation". The comments prompted a swift response from Taoiseach Enda Kenny, who is currently visiting Canada.
"The treaties of the EU set out quite clearly the responsibility of countries as a national competence to deal with their corporate tax," he said. "Ireland's tax rate has been 12.5pc for many years across all sectors and it has not moved up, it has not moved down, and it will stay where it is.
"There have been attempts at this before and suggestions of that before. It is enshrined in the protocol of the treaty, it is a national competence for everyone in the European Union." Mr Macron's manifesto explicitly mentions tax harmonisation among EU member states as a way of combating aggressive tax avoidance measures by multinationals such as Apple operating in the eurozone. He also sees it a way of stopping eurozone states from using extremely low corporate tax regimes as a way of outbidding other states.
Ireland has been in the spotlight over its low corporation tax rate of 12.5pc and allegations of "sweetheart deals" to multinationals. The European Commission announced in August last year that Ireland must collect €13bn plus interest from Apple for taxes that were unpaid over a decade as a result of a tax treatment that amounted to illegal State aid to the company. The Government and Apple have appealed against the decision.
Mr Beaune, who studied economic and business student at Trinity College Dublin, noted that the tax harmonisation plan was "not to have exactly the same level corporate tax but we have to converge to some extent". The European Commission under President Jean-Claude Juncker last year re-released proposals for a consolidated corporate tax base among eurozone states. Multinationals' tax would be calculated based on a single formula of the amount of assets, sales and labour in the country they are based.
The Commission's Common Consolidated Corporate Tax Base (CCCTB) proposals make up part of Mr Macron's economic policy for when he has a seat at the powerful European Council table - where all EU heads of state and government sit. "It's part of his agenda to have the same base - it's also about the rate, and about the specific schemes and rules that every country has in its corporate tax regime", Mr Beaune said.
Sources from the Government refer to the cast-iron guarantees in the Lisbon Treaty that underpin tax as an issue of national competency. CCCTB has been a proposal that some eurozone governments have supported, but it has never gathered momentum. "Ireland has been on the front line with exchange of information and transparency about our tax laws", said one source. "We don't need to agree to CCCTB to appear transparent."
munkijunk on May 5th, 2017 at 08:47 UTC »
Hello... Ireland form 1980 here. We have zero international investment, our infrastructure is terrible, unemployment is through the roof, 100 years on from the famine and the country is still to stop bleeding it's most tallented youth to the US and UK. But what's this? Low corporate tax rates which make a rock on the edge of Europe in the middle of the Atlantic a possibility good choice for overseas investment. Let's try it a and see what happens
(20 years later)
What do you know? We're the fastest growing economy in the world, a marvel of age, we have net immigration for the first time ever, we have one of the lowest unemployment rates in the EU, and we have developed on of the best hubs for digitally based and etech companies in the EU as well as a massive pharma, biotech industry.
I'm not the biggest fan of today's tax regime in Ireland and am sure that the ecosystem it created is now resilient to more stringent taxation, but god damn it was necessary in the 80s and if Europe is to develop on the fringes countries need to be able to have control over their own taxation. That said, there is an issue.
Perhaps a better idea would be a statutory EU tax for corporations which would be paid to the community as a whole, and a domestic tax which would be paid to the country, but harmonised tax would be great for France and Germany, would be a disaster for any of the smaller countries in the EU and their chance for development.
EDIT: As I have to keep on repeating it....
I THINK IRELAND SHOULD NO LONGER BE TAKING ADVANTAGE OF THIS CORPORATE TAX REGIMEBut it was totally right that a struggling economy was able to make itself an attractive option to those multinationals looking to invest somewhere in Europe.
EDIT2: Also I'm talking about the 12.5% for trading income and 25% for non-trading income, not the Double Irish or Apple's sweetheart deal, however, it would be naive in the extreme to not see these loopholes and unfair practices as more reason for the further reason for the international investment Ireland benefited from.
Thelastgoodemperor on May 5th, 2017 at 06:12 UTC »
I wish him the best of luck, it is hard to changes these structures though.
It is important to remember it shouldn't matter if Ireland had zero taxes for their own domestic companies. What matters is finding a solution to make taxation take place where the actual processes are taking place. This is a huge questions which is incredibly hard to solve. In my opinion we need some kind of EU regulation, a so called "constitution for taxation", which clearly sets out what income each country can tax.
idee_fx2 on May 5th, 2017 at 06:05 UTC »
If i understand well how europe works, if the irish don't want that happening (and they won't), it is not happening as it would likely need a new treaty and if one country refuses to sign, it is over.