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EU probe into Ireland tax deals with multinationals

The probe, by the European Commission, also looks at Luxembourg and the Netherlands – but the Department of Finance said that “no formal EU state aid enquiry has been launched”.

Image: Tax form via Shutterstock

Updated 11.26pm

IRELAND’S TAX DEALS with multinational companies such as Apple and Starbucks are to be probed by the European Commission.

That is according to the Financial Times, which says that Brussels is probing not just Ireland but Luxembourg and the Netherlands over such deals.

However, a spokesperson from the Department of Finance told TheJournal.ie that “no formal EU state aid enquiry has been launched by the European Commission on this issue”.

They said they understand that the European Commission is asking various member states to provide information, so in other words “this is not a country specific or a company specific issue”.

“Ireland, like all Member States, from time to time receives queries from the Commission on a variety of issues, including tax, and we always cooperate fully with such requests for information,” said the spokesperson, adding that in the majority of cases, such requests do not result in formal state aid enquiries.

The Department said that the essence of State Aid is about aiding a particular sector or type of investor, but the Irish rules do not do that.

Ireland does not do special tax rate deals with companies, it said, while the country “operates an open, transparent and statute based taxation system”.

It noted that throughout the recent Irish presidency of the EU Council, “Ireland has been at the forefront of actions seeking to combat aggressive tax planning” and that the country is also fully supporting the BEPS (Base Erosion and Profit Shifting) project at OECD, and will continue to work with international partners to ensure fair tax competition.

Investigation

The Financial Times says that the ‘probe’ could pave the way for a formal investigation, and looks at ‘illegal sweeteners’ given to multinationals as part of tax deals.

The governments are expected to explain their system of tax rulings, according to those who have seen the Comission’s request. They are also asked to detail the assurances given to several named companies, which are said to include Apple and Starbucks.

The probe doesn’t mean that Ireland is suspected of any wrongdoing.

Apple has previously been accused by a US Senate Subcommittee of using Ireland as tax haven, as it reportedly avoided paying €34 billion in US taxes over a four-year period by operating off-shore companies in Cork.

The UK parliament’s Public Accounts Committee also accused internet search engine Google of“devious” use of Ireland’s corporate tax regulations to reduce its tax bill in Britain earlier this year.

A letter written by Ireland’s US ambassador Michael Collins in May sought to address the way the Senate committee represented Ireland’s corporate tax system during the Apple hearings.

In a letter published on the Department of Finance website, he said that “there is no possibility of individual special tax rates being negotiated for companies”.

Tanaiste Eamon Gilmore also said that same month that companies in Ireland pay close to the correct amount of tax.

Today, Peter Vale, tax partner at Grant Thornton described the ongoing focus on Ireland’s tax regime as “frustrating”, saying that the country “has one of the most transparent tax systems in the developed world, with a large network of tax treaty and exchange of information agreements”.

Vale said that “Ireland did not enter into any deals offering companies a lower rate of tax as an incentive to establish here” and that the 12.5 per cent tax rate is fixed and there is no special lower rate available.

He even suggested that “there is more than a hint of envy at how Ireland has successfully used tax policy as a tool to attract foreign direct investment”.

First published 8.13am

Read: Star coffee chain struggles to bring in the bucks>

Read: Ireland is Apple’s ‘Holy Grail of tax avoidance’>

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