A small country perspective on international taxation

Transcription

1 A small country perspective on international taxation Ann Nolan, Second Secretary General, Ministry of Finance, Ireland Oxford University Centre for Business Taxation, Summer Conference, 23 June 2014

2 Outline of Presentation 1. International Taxation: Perception v Reality 2. Is Tax Competition Bad? 3. The Irish Perspective on Tax Competition 4. Is OECD BEPS Project the answer to problems in International Taxation? 5. Potential Impact on Ireland of BEPS Project

3 International Taxation: Perception Vs Reality Perception? MNCs are evil Tax competition is bad The digital economy is different [insert name of any country here] is a tax haven Reality? MNCs tend to be tax compliant Fair tax competition is good (to be discussed) Entire economy is becoming digitalized (so no special rules) International co-operation has never been stronger

4 Is Tax Competition Bad? Fair v. Unfair tax competition At core of economic policy Levels the playing field Not about a race to the bottom But substance must follow form.

5 The Irish Perspective on Tax Competition: An Economy built on 1) True substance 2) Quality jobs 3) Real investment

6 Ireland s Corporation Tax Strategy in a Nutshell Play fair but play to win! Low rate wide base

7 Remember it s not just about taxation 1 st for FDI by quality and value of investment 1 st in OCO 2012 FDI Olympics Leaderboard 1 st in Eurozone ranking of best countries for business 1 st in the EU for ease of starting a business 1 st for employable graduates, skills availability & workforce flexibility 1 st in most globalised Western economy ranking

8 Is BEPS Project the Answer to Problems in International Tax? Best description of BEPS: BEPS is technical in nature but political in flavour If the BEPS project didn t exist, we probably would have had to create it

9 International tax complexity OECD - BEPS EU Other Digital economy taskforce WP 1 FHTP FG on Treaty abuse FG on Permanent Establishments FG on Dispute Resolution Code of Conduct Group Exemption regimes CFC Patent boxes Harmful tax competition Subgroup on hybrids Working Party on Tax Questions Bilateral treaty negotiations US tax reform Transfer pricing adjustments/map WP on ATP WP 2 (collect and analyse BEPS data) WP 6 Expert group on multilateral instrument Hybrids CFC Interest deductions Mandatory disclosure FG on transfer pricing - IP FG on transfer pricing risks & capital FG on TP other high risk transactions FG on TP documentation CCCTB Other files as they arise WP IV Digital economy? Commission Good Governance Platform Joint Transfer Pricing Forum Exchange of information EU FATCA Revision of directives Cion Action Plan & Recommendatio ns Revise Parent-Sub Directive Revise I&R Directive Double taxation Other OECD WP 1 Treaties (non BEPS) OECD WP 6 - TP (non BEPS) OECD subgroup on ATP = New group

10 OECD Base Erosion & Profit Shifting Project The OECD has consistently supported tax competition and the BEPS project is not going to change this fundamental principle. However, the BEPS actions, once they are implemented globally will make a significant contribution to the fight against harmful tax competition.

11 What is the OECD targeting with BEPS? According to the OECD - Base erosion and profit shifting (BEPS) refers to tax planning strategies that exploit gaps and mismatches in tax rules to make profits disappear for tax purposes or to shift profits to locations where there is little or no real activity but the taxes are low resulting in little or no overall corporate tax being paid.

12 Potential Impact on Ireland of BEPS Project? Ireland is actively engaged in the OECD BEPS process and will part of the solution rather than the problem. The alternative is unilateral action proven to be difficult in practice. Potential opportunities? aligning taxing rights with real substance has been a corner stone of the Irish corporation tax policy since the early 1950s. No doubt there will be challenges and changes which will come down the line, but all countries will face these challenges.

13 Department of Finance BEPS consultation (now underway) Public consultation important to engage with tax payers Effective tool to enhance public awareness and increase stakeholder involvement. 6 Questions: Which actions should be considered the highest priorities for Ireland? Are there other int l tax proposals that would be of concern to Ireland? Best way for Ireland to ensure tax provisions are competitive? Are our current residence rules appropriate? What are the critical considerations for Ireland? Any other priority areas or future challenges?

14 Thank You For more information please go to: Copyright 2014 Department of Finance Disclaimer This presentation is for informational purposes only. The Department of Finance does not guarantee the accuracy or completeness of information which is contained in this document and which is stated to have been obtained from or is based upon trade and statistical services or other third party sources. Any data on past performance contained herein is no indication as to future performance. No representation is made as to the reasonableness of the assumptions made within or the accuracy or completeness of any modelling, scenario analysis or back-testing. All opinions and estimates are given as of the date hereof and are subject to change. The information in this document is not intended to predict actual results and no assurances are given with respect thereto.