The Irish Minister for Finance made his annual budget
announcement on October 10 2017. The budget contained a number
of measures proposing amendments to domestic Irish tax law,
most of which were in line with pre-budget expectations. In
addition, as part of the budget package, the minister also
published a paper on Ireland's international tax strategy and
corporation tax review (the strategy paper), which provides
valuable insight into the Irish tax policy agenda for the
coming years.
Impact on corporation tax
In delivering the budget, the minister highlighted the
importance of tax certainty in the current international
climate, noting that Ireland has a stable, transparent and
competitive tax system. In particular, the minister confirmed
that the 12.5% rate "is, and will remain, a core part of our
offering".
As expected, the budget contained proposals to limit the
annual value of tax amortisation available in respect of
acquired intellectual property (IP) to 80% of the annual
profits generated from the exploitation of the acquired IP. The
80% limit will, of course, only impact on the timing of
amortisation given that the entire value of the IP remains
available for amortisation.
It is expected that the 80% limit will apply prospectively
to IP acquired after midnight on October 10 2017. The proposed
implementation of the measure will become clearer upon the
publication of the Finance Bill on October 19 2017.
International tax strategy
In the strategy paper, the minister confirmed that Ireland
will continue to take the actions needed to meet the highest
standards in international tax while ensuring that the tax
offering remains highly competitive to support economic growth.
The strategy paper outlines Ireland's position on a number of
ongoing international developments, including:
- The OECD Multilateral Instrument (MLI):
Ireland's ratification of the MLI will be provided for in
Finance Bill 2017;
- Taxing the digital economy: Ireland is
opposed to moving away from the global consensus at OECD
level to taxing the digital economy, which would result in
double tax and significant uncertainty; and
- Unanimity at EU level: Ireland will
continue to insist that all tax measures at the EU level
require unanimous approval of all member states.
Consultation on modernisation
Following the recommendations of independent expert Seamus
Coffey, which were detailed in the recently published 'Review
of Ireland's Corporation Tax Code', the strategy paper invites
public consultation on the implementation of a number of
international modernising measures into domestic Irish tax law.
Among the modernising measures within the scope of the
consultation are:
- The transposition of the EU Anti-Tax
Avoidance Directive into Irish law;
- The incorporation of the 2017 OECD
Transfer Pricing Guidelines into Irish domestic law;
- The expansion of domestic transfer pricing
rules to non-trading transactions, capital transactions, and
arrangements agreed prior to July 1 2010; and
- The move to a territorial corporation tax
base in respect of income from foreign branches and foreign
source dividends.
The public are invited to comment on the modernising
measures on or before January 30 2018. Comments submitted will
be taken into consideration by the Department of Finance in the
implementation of the modernising measures over the coming
years.
Comment
The budget package comprises the latest measures in the
ongoing modernisation of Ireland's tax system. Importantly, the
budget and strategy paper are further evidence of the
commitment by Irish tax policy makers to ensure the tax system
offers certainty and stability to taxpayers despite widespread
uncertainty internationally. Furthermore, it is clear that
Ireland remains strenuously committed to maintaining a
competitive corporate tax offering of which the 12.5% rate is
the bedrock.
|
Joe Duffy |
|
|
Tomás Bailey |
Joe Duffy (joe.duffy@matheson.com)
and Tomás Bailey (tomas.bailey@matheson.com)
Matheson
Tel: +353 1 232 2688 and +353 1 232 3726
Website: www.matheson.com