EU leaders yesterday pledged to intensify co-ordination of tax disclosure in an attempt to tackle aggressive tax planning, as Ireland’s corporate tax regime continued to come under the spotlight in the wake of a US Senate report on Apple’s tax structures.
European Council president Herman Van Rompuy said that Europe would push the need for a global standard in international forums such as the G8 and G20. “Tax matters are always sensitive . . . but by nature tax evasion is something no country can solve on its own,” the head of the European Council said following the four-hour meeting of leaders.
Sharing data on savings
While Luxembourg and Austria agreed to sign up to the savings tax directive, a key piece of EU legislation which obliges countries to disclose information about savers for tax purposes, their support is only conditional on so-called third countries such as Switzerland, Liechtenstein and Monaco, signing up to similar legislation. While the EU-wide savings tax directive was introduced in 2003, Austria and Luxembourg refused to sign up to the legislation.
Last week European finance ministers agreed a negotiating mandate to begin discussions with third countries on savings taxation, with Austria and Luxembourg agreeing in principle yesterday to sign up to the sharing of data by year end, on condition that third countries also agree to the rules.
Meanwhile Taoiseach Enda Kenny defended Ireland’s corporate tax regime at the fringes of yesterday’s summit, rejecting claims that computer giant Apple had negotiated a tax rate of 2 per cent with the Irish government. “Our corporate tax rate is in statute, in law” he said.
“If you look at the OECD criteria for tax havens, Ireland fits into none of those,” he said, adding that Ireland had been the fourth country to sign up to the American Foreign Account Tax Compliance Act . “There’s been quite a lot of media comment about Ireland in the last few days. I’d like to repeat that Ireland’s corporate tax rate is statute-based, is very clear, is very transparent and we do not do special deals with any individual companies in regard to that tax rate.”
Mr Kenny also told reporters that Ireland had continued “and will continue” to compete for international business, and has had a stable corporate tax rate for many years. However, he noted that tax was not the only reason companies come to Ireland. “It is because of our technology, because of our track record, and because of our talent pool,” he said.
His comments came as a new report from Oxfam Ireland claimed that more than €700 billion owned by individuals internationally could be held in Irish financial institutions. The report says that 5 per cent of the estimated €14.3 trillion held by individuals in 52 tax havens around the world resides in Irish accounts, equating to €707 billion.
According to Oxfam, its figures are based on analysis of data from the Bank of International Settlements, the International Monetary Fund and national authorities such as the Irish Central Bank. The report also pointed to the Netherlands, Luxembourg , Cyprus, and the UK and its dependencies such as the Cayman Islands, as places that “could be assisting people in avoiding tax”.
'Hidden money'
"This is about fairness and equality. Making sure individuals and companies pay their fair share would help eradicate the pervasive inequalities in society that mean one in eight people still go to bed hungry every night," Oxfam Ireland chief executive Jim Clarken said. "This hidden money could provide urgent finance for essential public services like health and education both at home and in poor countries."
