Ireland has signed a large number of damaging tax treaties with developing countries in recent years, according to a new report that also reveals a sharp rise in so-called secret “sweetheart deals” agreed between multinationals and European governments.
The Survival of the Richest study reveals the amount of deals between multinationals and European governments has risen by nearly 50 per cent since the LuxLeaks scandal.
The study was produced by a coalition of European civil society organisations, including Debt and Development Coalition Ireland. It shows the number of deals agreed across the European Union rose from 547 in 2013 to 972 in 2014 to 1,444 by the end of 2015, an increase of 160 per cent in just two years.
The report also says European governments are continuing to sign what it calls “very problematic” tax treaties with developing countries that on average reduce rates by 3.8 per cent.
According to the study, these treaties can help facilitate tax dodging and impose restrictions on tax systems in developing countries.
Of the 18 countries analysed, Ireland has on average introduced the highest number of reductions of developing country tax rates – 5.2 percentage points.
According to recent research by ActionAid Ireland cited in the report, three of Ireland’s tax treaties with developing countries were defined as being “very restrictive” on the taxing rights of those nations.
The analysis notes that “several Irish tax treaties lead to a significant reduction of royalty withholding tax in the source state”.
The report goes on to add that the Irish treaties don’t just impact on royalties, but “include relatively high reductions on all income categories.”
A real global body
"Developing countries keep paying a dear price for a global tax system they didn't create," said Maeve Bateman, director of Debt and Development Coalition Ireland, which prepared the Irish chapter of the report.
“We’ve analysed 18 European countries and not found one single government that supports the idea of establishing a real global body where developed and developing countries can participate on an equal footing and agree a common solution to this problem,” she said.
“The tax revelations of 2016 demonstrate the need for significant reforms. Ireland needs to make changes to both our own tax practices, and the role we play at international level, if we are to ensure transparency and accountability for our own citizens and meet our moral responsibilities towards the rest of the world.”
According to the study, the most dramatic increases in “sweetheart deals” have occurred in Belgium and in Luxembourg, where the amount of agreements rose by 50 per cent in just one year.
Luxembourg struck 172 secret tax deals in the year after the LuxLeaks scandal in November 2014 first exposed the high number of agreements made between the government and multinationals.
Said Ms Bateman: “Given the focus on the Apple state aid case in Ireland, the fact that multinational corporations now have more than 1,000 sweetheart deals in Europe is deeply concerning.”
