The chair of the European Parliament’s Special Committee on Tax Rulings has warned the Government that recent changes to corporate tax arrangements must not simply replace tax incentives that were previously abolished.
Speaking after as the European Parliament voted overwhelmingly in favour of a resolution supporting fairer corporate taxation across Europe on Wednesday, Alain Lamassoure indicated that he was satisfied with the level of engagement by Irish authorities with the committee’s work. But he stressed that changes including the abolition of the ‘double Irish’ should not be replaced by other measures such as the innovation box introduced last year.
“It is important that the reforms announced are implemented and translated into reality, and are not simply replaced by other types of fiscal advantages,” he said. “We have to be attentive that this is not just the same substance with a different name.”
In the latest signal of a clamp-down on corporate tax avoidance at EU level, the European Parliament backed a resolution to overhaul the corporate tax regime across Europe on Wednesday, which includes a proposal to introduce a Common Consolidated Corporate Tax Base (CCCTB).
Fine Gael four
In an unusual move, Fine Gael’s four MEPs broke with the European People’s Party (EPP) and voted against the main resolution.
Sinn Féin’s Matt Carthy and Lynn Boylan also voted against, while Independent MEPs Marian Harkin and Nessa Childers voted in favour. Luke ‘Ming’ Flanagan abstained from the vote.
The resolution was approved by 508 votes to 108, with 85 abstentions.
Among the measures included in the package was a pledge to introduce a common consolidated corporate tax base (CCCTB) and greater transparency with regard to national tax “rulings” - letters of comfort given to individual companies by national tax authorities.
The suite of measures emerged from a report compiled by the European Parliament’s Special Committee on Tax Rulings, established in the wake of the Luxembourg Leaks scandal, and which visited Ireland in May.
Speaking in the parliamentary chamber after the vote Fine Gael’s Sean Kelly explained why his party had chosen not to vote with the centre-right EPP group to which it is aligned.
‘Strong issue’
“This is a very strong issue for our country. We think the report goes overboard in calling for the Commission to do certain things when certain investigations are ongoing. Tax is a national competence and this has ben recognised in the various EU referendums.”
Fine Gael MEP for Dublin, Brian Hayes, said that while there were certain positive aspects in the report, he believed the Parliament was “meddling in sovereign tax matters.”
“Ireland was given firm commitments that we can set our firm rate of corporate tax. In language and in content this report oversteps the mark.”
Independent Marian Harkin said she decided to back the resolution, although she voted against two specific measures including the idea of a mandatory CCCTB. “If Ireland is fully transparent, then we have nothing to fear. It’s important that we are part of the global approach. The Lux Leaks scandal revealed how multinationals are exploiting loopholes within jurisdictions. It’s not tenable.”
Nessa Childers welcomed the endorsement of the report. “The amount we lose to tax evasion every year has been estimated to be in the region of the whole budget of the European Union,” she said.
In an indication of the widespread political support at EU level for greater corporate tax cooperation across the European Union, the vast majority of MEPs supported the resolution.
Game-changer
Elisa Ferreira, a Portuguese MEP who helped draft the report said she hoped it would be a game-changer.
“At a time when we have a single currency, an environment where European economic governance governs how national and EU budgets work. Under these circumstances, individual countries simply cannot be in a position to allow tax havens to be created, particularly at a time when we all have to make budget cuts.”
She added: “On the one hand we have austerity, cuts to health and education. On the other hand we have multinational corporations that have a free hand. This is something that is politically unacceptable. Europe must use this opportunity to change the status quo.”
The European Parliament declined to extend the mandate of the Special Committee on Taxation, a move that was criticised by the Green Party in particular.
