The new president of the Irish Tax Institute says the Government must "come to terms" with whatever global deal is agreed on corporate tax .
Deloitte tax partner Karen Frawley, who was elected to the institute role on Thursday, also told its agm that the Republic "must reduce our obvious over-dependence on corporation tax receipts from the multinational sector".
Over half of the corporate tax take of about €12 billion last year came from the top 10 multinationals operating here. To reduce this reliance, Ms Frawley suggested the Government should look to build up the base of smaller, indigenous exporters.
“There is a crying need to apply to our domestic SMEs the same rigorous and innovative approach that has served us so well in the FDI [foreign direct investment] sector,” she said.
Ms Frawley said the Government needs to move quickly to sharpen Ireland’s “competitive edge” as the global tax system is overhauled. The institute wants the Government to change how Ireland taxes the foreign earnings of multinationals based here. It also wants to remove the distinction in tax law between trading and non-trading income, and a review of R&D credits.
A proposed OECD [Organisation for Economic Co-operation and Development] deal to impose a global minimum rate of corporation tax of 15 per cent and ensure tech companies pay more tax in bigger countries is due to be finalised at a G20 meeting in Rome next month. More than 130 nations have already accepted the US-driven deal but Minister for Finance Paschal Donohoe has so far refused to commit to it. The Government is also awaiting the outcome of US tax reform proposals.
Given the uncertainty in Washington and the potential for further wrangling over the OECD deal, Ms Frawley said the Minister is “right” not to sign up.
“What is clear, amid all the uncertainty, is that significant change is on the way and, as a small trading nation, Ireland will have to come to terms with whatever reforms are agreed,” she said.
