On the taxation of multinationals

The international community’s pressure is mounting on the
taxation of multinationals; and it is starting to result in some significant
changes to existing taxation structures.
Recently, in delivering the Budget, the Irish Finance
Minister announced that the government would begin phasing out the ‘double
Irish’ structure. As members will be aware, the double Irish allows firms with
operations in Ireland to make intellectual property royalty payments to a
separate Irish-registered subsidiary that is resident in a country that has no
corporate income tax.
This change takes effect from 1 January 2015 for new
companies, but existing companies have a generous transition period to the end
of 2020.
However, despite the positive sentiment behind this
face-saving announcement, there is still a major aspect of the Irish tax system
that remains of international concern: the very low 12.5% company tax rate that
will remain untouched.
It is clear that it will take much more pressure from the
international community to change that rather large carrot.
The Tax Institute will continue to be involved in BEPS
issues here in Australia, including with respect to the flow-on effects from
activity in other jurisdictions. I encourage members who would like to discuss
this further to be in touch.

Robert Jeremenko CTA is Senior Tax Counsel of The Tax Institute.

The Tax Institute is Australia’s leading professional association in tax. Its 13,000 members include tax agents, accountants and lawyers as well as tax practitioners in corporations, government and academia.


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