New challenges have been highlighted to the State’s corporate tax practices as proposals for a Europe-wide corporate tax base were unveiled by the European Union.
Meanwhile, the Government received something of a slapdown from economist and UN special adviser Jeffrey Sachs.
In the European Union’s latest clampdown on aggressive tax planning by multinationals, Pierre Moscovici, the EU’s economics commissioner, presented a proposal for the “common consolidated corporate tax base” in Strasbourg.
The two-phased approach would involve a common corporate tax base by harmonising the rules by which companies calculate their taxable profits across the EU. The aim is to significantly reduce costs for businesses that operate across borders.
The second, more controversial aspect of the proposal, which has been deferred until a later date, is the consolidation element. This would oblige companies to aggregate their profits across the EU and then divide out the taxable profits among member states.
Each country would tax their share of the profits at their own national rate. It is this second element of the proposal that is likely to ruffle a few feathers in the Department of Finance. It’s important to note that the proposals will have to get the all-clear from member states.
Meanwhile, Sachs really put the boot in, accusing the Government of facilitating multinational tax avoidance on a grand scale and describing Apple’s tax arrangements here as “offensive”.
He said the tech giant was just one of several US multinationals to receive preferential deals from the State and that the Republic’s policies stood as a barrier to establishing an open and transparent global system.
Sachs, who acted as an economic adviser to Bernie Sanders in the recent Democratic primaries in the US, said Apple had avoided US corporate taxes through "a sleight of hand" by Apple and that the Government had "played along with this game".
Following an Irish Times interview with EU competition commissioner Margrethe Vestager last week in which she declined to rule out further investigations into Ireland's tax arrangements with companies, Taoiseach Enda Kenny was out firefighting.
He said he didn’t believe there were any impending state-aid cases against Ireland from the European Commission, despite Vestager’s contention that the Republic had provided it with details of up to 300 tax rulings it offered to companies over a three-year period.
Media ownership
The thorny issue of media ownership was in the limelight again, as an independent report commissioned by Sinn Féin MEP Lynn Boylan was highly critical of the concentrated nature of Irish media ownership.
Both State broadcaster RTÉ and businessman Denis O'Brien were named as significant contributors to an unhealthy concentration of ownership. It said O'Brien's dominance coupled with his fondness for litigation created a "perfect storm which threatens news plurality and undermines the media's ability to perform its watchdog function".
O’Brien, who also owns several radio stations including Newstalk and Today FM, dismissed the findings.
“I do not believe the Irish media is objective in relation to matters relating to itself,” he said. “The prime reason is survival. Every media executive and journalist knows that the future of traditional media is bleak.”
O’Brien also revealed that Independent News & Media, of which he is the majority shareholder, “was days from forced closure back in 2011” and that some media companies “will not survive this decade” without radical restructuring.
One thing that might help the media is digital advertising. Revenues in the sector grew by 33 per cent in the first half of the year, with social media extending its share of the market and mobile overtaking desktop.
The new figures from industry body IAB Ireland show spending on digital advertising in the Irish market reached a record €216 million in the first six months of 2016. Mobile revenues soared 67 per cent year on year and edged ahead of desktop.
Clerys closure
The controversial closure of Clerys remains in the news and this week the High Court rejected a challenge by investment company D2 Private and its owner Deirdre Foley in relation to the powers of inspectors to seize laptops and documents.
Mr Justice Michael Twomey said he did not see “any basis” for interfering with the investigation or for making orders directing that a laptop and documents seized from the D2 offices at Harcourt Terrace last May be returned. D2 Private and Foley had disputed the powers of the inspectors to search offices and take the materials.
Staying on O'Connell Street, Dublin's landmark Gresham Hotel, which was recently acquired by Spain's Riu Hotels & Resorts for more than €90 million, revealed how its revenues rose sharply last year.
Turnover at the hotel rose to €16.1 million last year from €14 million in 2014 due to increased bookings from attendees coming to Dublin for events and conferences. Newly filed accounts show it recorded a €40.1 million profit last year, up from just €2.86 million in 2014 due, to a €30 million writeback on impairment provisions.
Not far away, Dublin's Jervis Shopping Centre is to get its first major shake-up in 20 years with plans by the UK's Arcadia Group to replace its five fashion shops with a new flagship Topshop-Topman store.
Soft Brexit
For all the doom and gloom around the UK these days, it appears to be a case of steady as she goes in London – for now at least.
The UK economy barely slowed in the third quarter despite the Brexit vote shock, further diminishing the chance of a fresh interest-rate cut by the Bank of England next week. Third-quarter GDP grew by 0.5 per cent, while the annual growth rate remains a healthy 2.3 per cent.
British prime minister Theresa May even announced plans to build a third runway at Heathrow Airport after almost two decades of indecision by successive governments over the airport’s expansion.
It did cost her an MP, however, after Conservative Zac Goldsmith resigned his seat in protest at the “doomed” plan.
London mayor Sadiq Khan had his say on Brexit this week too, remarking that failure to maintain access for UK banks to the EU market would be an act of “economic sabotage” that would ripple across Britain.
In the Republic, the vultures of the Department of Finance can smell blood, and Minister of State for Financial Services Eoghan Murphy said the Government had a "clear roadmap" to maximise the State's ability to attract financial services companies from London.
