Ireland has committed to addressing issues highlighted in recent Country Specific Recommendations as part of Ireland’s National Recovery and Resilience Plan that has been submitted to the European Commission.
The draft Plan, involving projects with a value of almost €1 billion, will enable Ireland to access funding under the EU's Recovery and Resilience Facility which forms the centrepiece of NextGenerationEU, the Union’s response to the global pandemic. Ireland is expected to receive approximately €915m in grants under the RRF for the period 2021-2022. A further set of grants is to be allocated in 2023.
This builds on previous commitments to introduce a range of reform measures to continue efforts to tackle Aggressive Tax Planning, especially in relation to outbound payments.
As signalled in the Update to Ireland’s Corporation Tax Roadmap, which was published in January, we have committed to introduce a range of reform measures to continue efforts to tackle Aggressive Tax Planning.
In the draft recovery and resilience plan, from a tax perspective, commitments have been made to;
Apply enhanced Controlled Foreign Company rules apply to the list of non-cooperative jurisdictions.
Publish external independent economic research on the impact of recent legislative changes, both domestically and internationally, on outbound payments from Ireland.
Carry out a Public Consultation on the introduction of measures to ensure that Outbound Payments do not avail of double non-taxation.
Introduce legislation to safeguard against the possibility of double non-taxation in Finance Act 2023 at the latest.
Further detail and context can be accessed in the Update to Ireland's Corporation Tax Roadmap. The research and public consultation will be published on the Department of Finance website in due course.
At this point it is not anticipated that there will be a significant impact on Exchequer receipts as the above measures are behavioural are not expected to result in a reduction or increase in tax receipts.
It should first be noted that the Department cannot comment on the specific tax affairs or any identified individual or company due to the obligation to protect taxpayer confidentiality as provided for by section 851A of the Taxes Consolidation Act, 1997. It is an offence for a Revenue official to directly or indirectly disclose taxpayer information to third parties, including the Minister for Finance, unless this is specifically provided for in legislation.
My Department has pointed to the concentration risks associated with international tax proposals on many occasions. The Department’s SPU estimates assume a €2 billion revenue loss relative to baseline by 2025.
The IFAC report considers a scenario whereby five stylised large, foreign-owned multinational enterprises exit Ireland, which amounts to a revenue exposure of €3.25 billion. The corporation tax liability of these firms is based loosely on the average tax liability of the top multinationals in Ireland. This approach is obviously highly simplified and based on a number of very large assumptions but it appears that it is intended to be largely illustrative, rather than representing a projected outcome, which may reflect the fact that there is still a large degree of uncertainty as to the ultimate outcome of reform efforts.
