International tax planning and anti-avoidance
01 June 2012
With governments seeking to raise additional tax revenues to plug budget deficits, tax authorities are seeking to introduce and apply general anti-avoidance (GAA) legislation. Robert Henson and David Burke of Mason Hayes & Curran explain why a recent Irish Supreme Court decision has implications for multinational corporates doing business in and through Ireland.
Ireland''s GAA legislation has been in force for more than 20 years, however, it has remained largely untested until December 2011 when the majority of Ireland''s highest court ruled (3:2) in favour of Revenue in the case of Revenue v O''Flynn Construction Company Limited (the OFCL case).
The judgments delivered by the majority (Justice O''Donnell) and the minority (Justice McKechnie) in the Supreme Court are landmark. Central to the OFCL case was whether a series of about 40 complicated steps over about 50 days could be regarded as a "misuse or abuse of the provision [Export Sales Relief] having regard to the purposes for which it [Export Sales Relief] was provided".
Background to Ireland''s GAA legislation
In the OFCL case, Justice O''Donnell acknowledged that Ireland''s introduction of GAA legislation through section 86 of Finance Act 1989 (now contained in section 811 Taxes Consolidation Act (TCA) 1997) (section 86) followed the...
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