R&D tax credits and 12.5% tax rate red-line issues - Noonan

Tax credits for spending on research and development, and Ireland's 12.5 per cent corporation tax rate, were among the "red line issues" for Ireland outlined by the Minister for Finance Michael Noonan to an EU committee on taxation that visited Dublin.

Fine Gael MEP Brian Hayes, who was among those who met with Mr Noonan, said the Minister made it very clear where Ireland could and could not go in relation to EU proposals on corporation tax. The pending ruling from the European Commission on Ireland's tax arrangement with Apple was another item discussed.

Members of the European Parliament’s Special Committee on Tax Rulings, which was set up in response to the Luxleaks controversy, met with Mr Noonan, politicians on the finance and European committees, representatives of the so-called big four accountancy firms, NGOs, and academics, during their one-day visit. The group has already visited Belgium, Luxembourg and Switzerland, and is to visit the Netherlands and the UK.

Frank exchange

Chair of the committee Alain Lamassoure told journalists that he had a "candid and frank" exchange of views with Mr Noonan. He said he had learned that as Ireland gives tax opinions, rather than legally binding tax rulings, such as are issued by Luxembourg and the Benelux countries, that was no issue in that regard with this jurisdiction. He also said he had no problem with Ireland's corporation tax rate.

“Nobody can be against tax competition. It is just a fact of life,” he said. However what was need was a common understanding of how a company’s taxable income was arrived at.

He said that since the economic crisis began it was no longer possible for countries in the EU to “steal” a partner country’s tax base.

Mr Lamassoure, a former French minister, said that as with all areas of competition, there must be transparency and fairness in tax competition. Asked if Ireland’s corporation tax regime was not transparent, he raised his eyebrows.

“The double Irish, that is not transparent,” he said. He wanted to be sure that Ireland’s commitment to end the double Irish tax arrangement by 2020, for all companies, really applied.

Mr Lamassoure said the Luxleaks controversy had allowed Europe resume its debate on the introduction of a common consolidated corporate tax base (CCCTB) regime. Mr Hayes said Ireland is prepared to engage in a debate on CCCTB but the proposal “cannot be tax harmonisation through the back door”.

Mr Lamassoure said the new public attitude towards aggressive tax planning meant countries recognised that policies they had run up to now were no longer possible, and that a further indication of this had occurred on Wednesday when Switzerland signed a new agreement with the EU on the sharing of bank information.

He said Mr Noonan had spoken of rate, regime and reputation.

“Reputation is the most important,” Mr Lamassoure said. Switzerland and Luxembourg had recognised this.