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OECD takes aim at Irish tax loopholes in new report

The Paris-based Organisation for Economic Co-Operation and Development specifically criticises measures such as the so-called ‘Double Irish’ which allows technology companies to avoid taxes by shifting taxes from operations here to tax havens such as Bermuda.

The tech companies avoid taxes by having the intellectual property involved held by tiny Irish-registered subsidiaries that are tax resident offshore.

These measures allow Apple to pay an effective tax rate of around 1pc on its Irish profits. That has drawn the ire of many other countries from Australia to France and prompted members of the OECD to ask the think tank to draw up a report on the future of taxation.

In a report to be published this afternoon, the think tank will make recommendations on transfer pricing and other practices that are likely to provide the blueprint for a new agreement on taxation.

OECD secretary general Angel Gurría will release the recommendations. The government here officially supports moves to close tax loopholes following a chorus of international criticism, but has fears about the effects on jobs and has been slow to take real action.

In July, the G20 group of industrialised nations backed a “fundamental” rethink of the rules on taxing multinational corporations, taking aim at loopholes used by companies such as Apple and Google in Ireland to avoid billions of dollars in taxes.

The group said the existing system didn’t work, especially when it came to taxing companies that trade online.

Large budget deficits and public anger at inter-company structures designed to channel profits into tax havens have prodded governments to act.

Google, Apple and others say they follow the law wherever they operate and pay what tax is due but also have a duty to shareholders to organise their affairs in a tax-efficient way.

While the government here likes to trumpet the 12.5pc rate of corporation tax, the reality is that most companies look at other metrics.

The Netherlands and Luxembourg are also criticised in the report for their tax systems which also allow companies to pay little tax on large profits.

Article Source: http://tinyurl.com/kbwqb42

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