TWO GOVERNMENT MINISTERS struck conflicting tones at a major tax conference today, with one saying that Ireland needs to acknowledge the damage its tax policies have done to the country’s reputation.
That came from Children’s Minister Katherine Zappone, who was speaking at a government summit on corporate tax ‘fairness and responsibility’ held in Dublin.
The mood of Zappone’s speech was in sharp contrast to that from Fine Gael Finance Minister Michael Noonan, who claimed that Ireland has been leading the way internationally in the fight against tax avoidance by big companies.
The conference was held after Zappone, an independent TD, pushed for it as a condition of her support for the current Fine Gael government.
Today she said she “acknowledged the efforts of the government to close tax loopholes and eliminate irregularities”.
However, she added that for too long “the sanctity of our tax policies has too often been unquestioned at the expense of our core values”.
“We need to acknowledge the negative influences our former tax policies have had on developing countries and move forward expecting more from ourselves,” she said.
“Our perceived over reliance on our corporate tax competition has dented our reputation. We must not allow the ‘renegade’ stereotype created by the so-called ‘double Irish’ and other such practises lead to our isolation.”
Ireland’s international tax reputation took a major hit recently after the EU ordered that the country claim up to €13 billion in unpaid taxes from tech giant Apple. Brazil also recently placed Ireland on a list of international tax havens.
However, Michael Noonan was keen to put forward a positive image as to how Ireland has dealt with taxing companies.
He said the government was “willing to take action where needed to amend our corporate tax residence rules to prevent companies exploiting mismatches between our rules and the rules in other countries”.
“However, Ireland alone cannot prevent aggressive tax planning, which by its very nature relies on mismatches between different countries’ rules,” he said.
He also hit back at suggestions that Ireland has signed unfair tax treaties with developing countries.
A study published in December by a group of civil society organisations from 16 European countries found that European governments are signing what it called “very problematic” tax treaties with developing countries that reduced those states’ tax takes.
It found that the treaties reduced the withholding tax charged by developing countries by average reduce rates of 3.8%. Withholding taxes are taxes that one countries levies on another.
It was found that while Ireland had relatively few tax treaties with developing countries, the treaties that it had reduced tax rates by the most, by 5.2%.
Speaking today, Noonan said that there has been some “inaccurate criticism of Ireland’s engagement with developing countries on tax in recent times”.
“I strongly disagree with reports which paint a misleading and inaccurate picture of the small number of tax treaties which Ireland has with developing countries,” he said.
“None of those treaties were entered into without the agreement of the counterparty country. Ireland’s treaties with developing countries take elements from both the OECD and the UN model treaties.
“The new treaties reflect a more appropriate allocation of taxing rights between both countries.”