Despite a year of lobbying, Ireland is stuck on a Brazilian tax haven blacklist

IRELAND IS STUCK on a Brazilian tax haven ‘blacklist’ despite a year of government efforts to be removed from the list.

Last year, Brazil’s federal revenue service added Ireland, Austria, Curaçao and Saint Martin to its list of countries denominated as tax havens.

Other territories on the list include notorious jurisdictions such as Panama, Monaco and the Isle of Man.

The move has a significant impact on many Irish businesses, as firms listed in Ireland now have to pay a 25% tax rate on deals with businesses from Brazil instead of the 15% rate that previously applied.

The move was also met with dismay by many businesses in the giant South American country, particularly the airline industry.

As many of the world’s aircraft leasing companies are based in Ireland for tax reasons, the move made it more expensive for Brazilian airlines to lease planes.

Soon after Ireland’s initial inclusion, local authorities said that they were looking to get the Republic removed from the list “as soon as possible”.

The Irish ambassador in Brazil submitted a formal written request to the Brazilian tax office last September asking for the listing to be suspended and requesting that discussions could take place between officials from both countries.

Denied

A spokeswoman for the Department of Finance said that this request was accompanied by a “detailed explanation of the Irish corporate tax system outlining why Ireland should not be included on the list”.

However, while Brazilian tax officials agreed to meet with their Irish counterparts, it refused to suspend the ruling.

The Department of Finance said that a delegation from its office and from Revenue met with Brazilian officials “to seek a resolution to this issue” in March.

Revenue is trying to get Ireland off the list

“The issue was not resolved at this meeting and we remain on the list. Ireland’s appeal remains under consideration pending a final decision from the Brazilian revenue secretary,” a department spokeswoman told Fora.

She said that Brazil has made clear that while Ireland has been included on the Brazilian list, “Ireland is not considered a tax haven by Brazil”.

“Ireland has been included on this list on the basis that the 12.5% corporation tax rate is below 17%, the threshold set by Brazilian law,” she said.

A spokeswoman for the Brazilian revenue previously told Fora that Brazil considers a “tax favourable jurisdiction” one with a tax rate below when 20%.

“Ireland corporate tax is 12.5% which represents less than 40% of the Brazilian corporate rate of 34%,” she said.

Tax regime

Ireland has frequently been accused of being a tax haven by a string of non-profit groups and NGOs. This it is something that the Irish government has always strenuously denied, maintaining that it plays by the rules.

The country recently received one of the highest international ratings on tax transparency from the OECD.

In reports on 10 countries, Ireland was one of three which secured the highest possible overall rating of ‘compliant’. Half a dozen nations, including Bermuda and the Cayman Islands, were ranked as “largely compliant”.

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