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Minister Donohoe publishes Ireland’s Corporation Tax Roadmap

The Minister for Finance and Public Expenditure & Reform, Paschal Donohoe T.D., has today (Wednesday) published Ireland’s Corporation Tax Roadmap.
The Roadmap takes stock of the changing international tax environment, outlines the actions Ireland has taken to date and the further actions that will be taken over the coming years.

The Roadmap includes consideration of responses received to the Department’s consultation on the recommendations made in the Review of Ireland’s Corporation Tax Code, undertaken by Mr Seamus Coffey, and the implementation of the Anti-Tax Avoidance Directives.

The Roadmap outlines the significant further action that Ireland is taking as part of international tax reform efforts, including commitments that:
Legislation will be introduced in Finance Bill 2018 to introduce Controlled Foreign Company rules with effect from 1st January 2019;
The final legislative steps required to allow Ireland to complete the ratification of the BEPS Multilateral Instrument will be taken in Finance Bill 2018;
Legislation will be introduced in Finance Bill 2019 to introduce anti-hybrid rules, update and expand Ireland’s transfer pricing rules and fully implement the 6th EU Directive on Administrative Co-operation.
The Roadmap also flags the intention to hold further consultation processes on a range of issues including the technical design of complex ATAD measures and the Coffey Review recommendation to consider the potential impacts of moving to a territorial tax regime.
Publishing the Review today, Minister Donohoe said: ‘I am delighted to publish this comprehensive Roadmap which sets out a direction of travel for corporation tax reform over the coming years. The Roadmap highlights the significant actions that Ireland has taken and the actions we will continue to take to ensure that our corporation tax regime is transparent, sustainable and legitimate’.

‘It is vital to have a consensus-based, globally agreed approach to international tax. Tax rules need to continue evolve to match the modern world, and that evolution can best take place through international agreement at the OECD and the BEPS Inclusive Framework. Ireland will continue to foster economic activity in Ireland, the EU and beyond by adapting and evolving our corporate tax regime while maintaining our key 12.5% rate. This Roadmap demonstrates my, the Government’s, commitment to continuing the significant progress already made to strengthen Ireland’s corporation tax system now and in the years to come.’

Notes to Editors:

The Roadmap outlines the range of commitments for further action:
1. Legislation will be introduced in Finance Bill 2018 to introduce Controlled Foreign Company rules with effect from 1 January 2019.
2. Review of Ireland’s general Anti-Abuse Rule to ensure that it is consistent with Anti-Tax Avoidance Directive.
3. The final legislative steps required to allow Ireland to complete the ratification of the BEPS Multilateral Instrument will be taken in Finance Bill 2018.
4. Legislation to amend Ireland’s exit tax will be introduced no later than Finance Bill 2019.
5. Legislation will be introduced in a subsequent Finance Bill to introduce an interest limitation ratio. The timing of this legislation is yet to be determined.
6. Legislation will be introduced in Finance Bill 2019 to implement anti-hybrid rules and further legislation will be introduced in a subsequent Finance Bill to introduce reverse-hybrid rules.
7. Legislation will be introduced in Finance Bill 2019 to updated Ireland’s transfer pricing rules.
8. Legislation will be introduced in Finance Bill 2019 to ensure that Ireland fully implements the DAC6 Directive on the mandatory disclosure of tax planning arrangements.
9. Regulations will be issued before July 2019 to implement the Dispute Resolution Mechanism Directive and provide Irish taxpayers with access to this new arbitration framework.
10. The Taxation and Certain Other Matters (International Mutual Assistance) Bill will be published
11. It is intended that a public consultation will be launched in early 2019, seeking input on the alternative options of moving to a territorial regime or conducting a substantial review and simplification of the rules for the computation of double tax relief.

The key actions that have been taken by Ireland over the last five years are:
1. Changes were made to Ireland’s corporate tax residence rules in Finance (No.2) Act 2013 to prevent Irish incorporated companies from being stateless for tax purposes and in Finance Act 2014 to shut down known structures (such as the so-called ‘Double Irish’) which were designed to exploit gaps in US anti-avoidance rules. Action was taken by Ireland in the absence of US tax reform. US reform has subsequently taken place in a manner which should prevent any similar structures from being effective in avoiding US tax.

2. Ireland has continuously made changes to ensure we are constantly up to date with best practice on tax transparency and exchange of information. Ireland is one of only 22 jurisdictions to have been found to be fully compliant with new international best practice by the Global Forum on Tax Transparency and Exchange of Information. Ireland was an early adopter of the OECD Common Reporting Standard on Exchange of Financial Account Information, and in 2012 Ireland became the 4th country in the world to sign a FATCA Agreement with the USA.

3. Ireland commissioned and published a Spillover Analysis, carried out by the independent International Bureau of Fiscal Documentation (IBFD), to examine the impact of our corporation tax regime on developing countries.

4. Ireland introduced Country by Country Reporting in Finance Act 2015 and subsequently agreed a Directive (DAC4) to ensure a consistent approach on CbCR across the EU.

5. Ireland agreed and have fully implemented an EU Directive (DAC 3) to provide for the automatic exchange of information on advance cross-border tax rulings and advance pricing arrangements among all Member States. Ireland is also fully compliant with the BEPS Action 5 requirements on exchange of this taxpayer information.

6. Ireland was among the group of countries to sign the BEPS multilateral instrument at the first possible opportunity. This will see the majority of Ireland’s tax treaties updated to be BEPS compliant.

7. Ireland agreed two Anti-Tax Avoidance Directives (ATADs) with our fellow EU Member States in 2016 and 2017. The Anti-Tax Avoidance Directives represent binding commitments to implement 3 significant BEPS recommendations into Irish law as well as two additional anti-avoidance measures. This Roadmap sets out the planned implementation of the ATAD measures into Irish law, per the agreed schedule.

8. Ireland agreed an EU Directive (DAC5) to ensure access for tax administrations to information about beneficial owners of companies and other information held for anti-money laundering purposes. Ireland has made necessary tax regulations to ensure Revenue can access and exchange information on beneficial ownership of companies. Further work is ongoing on implementing the relevant anti-money laundering Directives.

9. Ireland agreed an EU Directive (DAC6) to introduce a common mandatory reporting regime for tax advisers and companies where transactions are entered into that meet certain hallmarks. Ireland was one of only three EU Member States to already have a mandatory disclosure regime in place prior to the agreement of the Directive.

10. Ireland agreed the Directive on Dispute Resolution Mechanisms to extend the availability of arbitration when two Member States disagree on how, and where, a taxpayer should be taxed.

11. Ireland agreed the first ever EU list of non-cooperative tax jurisdictions with our fellow Member States. The list has been extremely successful in encouraging third countries to commit to implementing international tax best practices.

12. Ireland commissioned an independent expert, Mr. Seamus Coffey, to carry out a thorough review of our Corporation Tax Code and to make recommendations for any reforms that may be needed. This review was published in September 2017.