Pascal Saint-Amans’s message is simple enough. As chief architect of the OECD plan to prise more tax from big global companies, he says Ireland should move rapidly to unwind contentious measures such as the “double Irish” tax-avoidance mechanism.
To those who say the Government would do better to wait, he says Ireland is being used by the companies that deploy such mechanisms.
Mr Saint-Amans, director of the OECD centre for tax policy, says scrapping this mechanism would have only a marginal impact on the Republic. He further argues that the totality of the measures set down yesterday represent good news for Ireland.
“Today you have the choice between zero per cent in Bermuda with an artificial scheme through Ireland or locating the real business in Ireland and paying your taxes in Ireland, your full taxes in Ireland,” he says.
“That’s what it means. So on the one hand putting an end to the abusive schemes, neutralising them, getting the instruments to countries to protect the tax base. But, on the other hand, recognising that tax competition is fine as long as you play by the rules.”
While the OECD has adopted a strikingly moralistic tone in respect of the drive to extract more tax from global firms, the question arises as to whether Ireland is a particular source of difficulty in the world of aggressive tax avoidance.
Double Irish
His reply is forthright: “Will I surprise you if I mention the ‘double Irish’, which is in the mind of the man and the woman in the street in most of the countries? So yes, there is an issue, because Ireland has been misused by a number of companies to locate the profit in Bermuda.”
But what of those who say it would be better for Ireland to wait for other countries? Companies tend to follow the tax advantage anyway and they could move business to other countries that don’t move.
Saint-Amans disputes that. “That’s where I would say that Ireland would need to move sooner rather than later, because it’s not about closing down Irish regimes and [leaving] some others open. It’s about providing the countries where the companies are locating instruments to protect their tax base. We’re not asking to close down any regime,” he says.
“We don’t expect Bermuda to put in place a corporate income tax but the schemes using Bermuda will be closed down.”
Progress expected
Although Dublin is undecided on the question on unilateral change, Saint-Amans says the Government has a “good understanding” of the issues at large. Progress is to be expected, he adds.
Yet the argument was always made in Irish circles that there was nothing to be done, because Irish law was very open, very transparent and statute-based and that no change was warranted.
Saint-Amans accepts the Irish regime is transparent but he insists that is not the point of discussion. “The point is not about hiding. The point is about abusing some of the possibilities to locate the profit in other jurisdictions.”
He perceives no threat here to Ireland’s policy on inward investment, which is crucial to boosting employment: “I do not think that there is a threat to employment, rather the other way around. I think that what is happening might actually attract more inward investment to Ireland.”
“It may have an impact on fake investment or investments which are actually booked in Bermuda, where you have a licence there but no real activity, where the real activity is in Ireland, so it may translate into more revenue for Ireland; and you also need it but also more inward investment.”
