Noonan: OECD report poses no threat to foreign direct investment

Minister for Finance Michael Noonan has welcomed the publication of today's OECD report saying it poses no threat to Ireland's foreign direct investment industry. But he warned that new EU proposals on taxation should not go further than the OECD standards.

Speaking in Luxembourg where he is attending two days of finance ministers meeting, Minister Noonan said that the new OECD rules will “play to (Ireland’s) advantage”, adding: “We don’t believe in aggressive tax planning.”

“We’re not a taxation haven. We never have been involved in any kind of tax malpractice. Sometimes international tax planners used Ireland, for example in the so called the Double Irish, but the Double Irish wasn’t an Irish policy, it was a consequence of residency laws in Ireland, doubled with tax arrangements elsewhere,” he said, pointing that he had already moved to stop certain tax practices in two finance bills, including the abolition of the Double Irish in the last finance bill.

Asked if the new BEPS proposals took into account the needs of smaller countries, Minister Noonan said that Ireland had contributed to the working groups while the proposals were being devised.

“We took part in all the relevant working parties and our views were taken into account. When you have a very large number of countries involved, effectively negotiating new agreements, there are compromises but we came out rather well and we were very happy by the country by country reporting. We think it will serve to encourage foreign direct investment into Ireland.”

Acknowledging that the next face in the regulation of multinational taxation would be at an EU level, he said that EU rules should not add “bells and whistles” to the international standards proposed by the OECD.

“The way that I see it is that the minimum standard piece is done, and countries will have to comply with that. When we move to the area of best practice I think the Commission now will take it over. We would be very interested in ensuring that what has been decided at the OECD is the policy, and that there aren’t bells and whistles which will work against our interest, added on by the Commission.” EU finance ministers are due to sign off on a proposal for an automatic exchange of tax rulings at their meeting on Tuesday.

In terms of the European Commission's proposal to introduce a Common Consolidated Corporate Tax Base (CCCTB), Minister Noonan said Ireland was willing to discuss the proposal but had "two red lines" – "One that the fixing of rates will still be a matter for sovereign governments as it is under the treaties now and secondly that any change will require unanimity as it is now with tax matters," he said. Minister Noonan said he was expecting a decision on the Commission's investigation into Ireland's tax dealings with computer company Apple by Christmas, though had no specific date. Asked if he was concerned about the outcome of the case.

“Anything that happens we don’t think will be damaging to us. If it’s adverse we think it’s based on very thin legal grounds and we’ll have it before the European Court of Justice.”

The European Commission is investigating two specific tax rulings provided by Irish tax authorities to subsidiaries of Apple amid concerns that they were in breach of state aid rules.

We removed the Double Irish in the last finance bill and in the one before we removed the possibility of stateless companies where double non-taxation was the rule rather than taxation”.