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Ireland to phase out ‘double Irish’ tax scheme

November 2014

The “double Irish” scheme enabling multinationals such as Apple, Facebook, Google, Microsoft and Yahoo to minimise their tax bills is to be phased out over four years. 

The arrangement, which angers EU countries and the US, allows large corporations to locate operating businesses in the Irish Republic and move taxable revenue from them to Irish-registered companies offshore.

In his budget speech finance minister Michael Noonan said the measure would enhance the country’s corporation tax regime and align it with best practice internationally.

He predicted: “It will ensure that Ireland continues to be the home of the best and most successful companies in the world.”

However, he defended the Irish Republic’s low 12.5% corporation tax, also criticised by other EU nations.

He said: “The 12.5% tax rate never has been and never will be up for discussion. The 12.5% tax rate is settled policy. It will not change.”

At the same time Noonan introduced a knowledge development box, through which multinationals will be able to conduct research and development in the Irish Republic and receive generous tax breaks.

The large charity Christian Aid welcomed the double Irish decision as “a landmark moment in the fight for tax justice”.

Sorley McCaughey, head of advocacy and policy at Christian Aid Ireland, said: “[The double Irish] has been hugely damaging to Ireland’s reputation and won us few friends. It is beyond time the government closed it down.

“The double Irish has come to symbolise all the elaborate tax avoidance schemes that multinationals and their advisers have engaged in. Many of these schemes have resulted in the poorest countries in the world losing billions every year in revenue that is rightfully theirs. Christian Aid puts the figure as up to $160bn (£99.3bn, €125bn) a year.”

Nevertheless, he thought the knowledge development box was just another form of tax avoidance. He said the UK’s patent box, a similar financial device, did not necessarily encourage innovation, and expected the Irish measure would lead the country into a fruitless “race to the bottom” on tax.

McCaughey believed other changes could improve the Irish Republic’s reputation, such as a public register of phantom companies’ real owners.
 




UK & NI Ireland | Tax Avoidance

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