The major ongoing reform proposals in the EU with regards to Corporation Tax surround the Common Corporate Tax Base (CCTB) and by extension, the Common Consolidated Corporate Tax Base (CCCTB).
The CCTB is being discussed first and only after it has been agreed will discussion move on to the CCCTB. By its nature, the CCTB is a complex and detailed proposal and Member States need to fully analyse and consider its potential impact on national tax systems. Member States are discussing and debating the various aspects of the proposal in the relevant tax working parties. In line with the Programme for Partnership Government, Ireland is engaging constructively with the proposal while critically analysing whether it is in line with Ireland’s long-term interests.
Proposals seeking new approaches to taxing large digital businesses have also been discussed recently. The OECD is currently carrying out important work on this area and is expected to publish an interim report in the first half of 2018. Ireland recognises the need for work in this area but believes that it would be premature to take action without considering the OECD analysis. Ireland believes that a consistent global approach is needed and that any solution must build on a shared understanding of where value is actually created by digital business.
All of these discussions are at a relatively early stage and the implications, if any, will depend on the exact nature of any changes which are ultimately agreed. It is important to remember that tax remains a matter of Member State competence and unanimity is required before any proposals can be agreed.
Notwithstanding potential reforms in the future, Enterprises locating real substantial activity in Ireland will continue to be subject to Irish tax at 12.5% on their profits properly attributable to activity located in Ireland.
Enterprises will always want to have operations in the EU, and taxation, whilst important is only one element of our continued attractiveness to FDI. For instance, the Institute for Management Development (IMD) ranks us as the 6th most competitive country globally. Ireland also scores very highly in terms of key criteria for FDI including investment incentives, labour productivity and the adaptability and retention of talent. As recognised by the IMD, many of Ireland’s traditional assets including our education system, highly skilled workforce and pro-enterprise business environment add to our competitive advantage and are extremely attractive to inward investors.
The State has a long track record of winning overseas investment, in that time the world economy has changed shape many times yet Ireland has remained an attractive destination for FDI. Our continual review and examination of how we can improve on the factors crucial to fostering investment here, including our cost base, infrastructure, the availability of talent and our legal and regulatory environment, ensure that Ireland continues to be a desirable location for FDI.
As the global investment climate continues to evolve, we will adapt accordingly – as we have done in the past – and make sure that Ireland continues to secure new FDI projects and the jobs that go with them.
