‘Double Irish’ abolition aims to bring tax residency rules up to date, Minister says

Abolition of the "double Irish" corporate structure will not bring an end to "international tax planning", Minister for Finance Michael Noonan has said.

The change would, however, “address the reality that Ireland’s company tax residence rules have not kept pace with international developments and being associated with the double Irish is damaging Ireland’s reputation”.

Mr Noonan told the Dáil that bringing an end to international tax planning would require co-ordinated action by many countries working together. However, he insisted that “I have always been clear that the double Irish is not part of the Irish tax offering”.

Ireland’s company tax residence rules will be changed under the measure, which will provide that all companies incorporated in the State be automatically tax resident here unless a bilateral tax agreement has been made.

The Minister was speaking as he introduced the formal debate on the 88-section Finance Bill, which gives effect to the measures he announced in the budget last month.

Sustainable growth

Mr Noonan told an almost empty Dáil that fiscal policy had to aim at maintaining sustainable growth. He reiterated his view that “there will be no return to the boom and bust model of the past. The Irish people have made major sacrifices and this Government will not take risks with the recovery. And people will see an increase in their take-home pay in January for the first time in years.”

Mr Noonan said Ireland’s debt is now on a downward trajectory and that the State’s debt ratio will drop below 100 per cent of GDP in 2018.

“The cost of our borrowing continues to fall,” he added, “and this afternoon the NTMA [National Treasury Management Agency] successfully raised €3.75 billion in a new 15-year bond issuance at 2.487 per cent, a historical low for 15-year issuance by Ireland.”

Confidence vote

He described this as a “huge vote of confidence in Ireland from investors”, comparing the 2.487 per cent rate with the 5.472 per cent yield for a 15-year bond issued in October 2009.

The budget was designed to reduce the deficit to 2.7 per cent in 2015. This deficit “forms a prudent buffer to allow for possible external shocks to the economy and will reassure the markets of Ireland’s steadfast commitment to restoring stability to the public finances.”

Mr Noonan made no reference in his speech to tax credits for water charges. Fianna Fáil finance spokesman Michael McGrath said this was “perceptive”. He said there had been eight changes to the Irish Water regime since May.

The Cork South-Central TD opposed the Revenue Commissioners taking responsibility for charges. He said Irish Water was already a bureaucratic nightmare and “we do not need to tie up Revenue” with a massive administrative burden.