The Department of Finance has launched a public consultation process on the effect that proposed international changes might have on the Irish tax system.
Brian Keegan, Director of Taxation with Chartered Accounts Ireland, explained that this was part of a process put in place by the OECD which is examining so-called base erosion and profit shifting, or BEPS. It was prompted by concerns raised by the G20 at the level of tax that multinationals pay. "The G20 asked the OECD to look at the ways that the "leaky bucket" of corporate tax could be improved and it's doing this in two ways - examining how multinationals offset taxes between countries and how they move profits between jurisdictions," he explained.
Brian Keegan said there were a number of ways in which the proposals could potentially hinder or help our position in Ireland. "Some of the proposals would move tax liabilities towards countries with a big market. For Ireland, with a big manufacturing base and a relatively small market, that would be a disadvantage. The OECD, however, don't challenge our 12.5% corporate tax rate but if there were more profits to be taxed here, that could be to our advantage."
Mr Keegan pointed out that we have a tendency to view our corporate tax structure as a product offering, but it is also an important part of our tax system contributing over 10% of the total tax take. "If companies pay less to the exchequer in taxes, we have to make shortfall in other taxes. Business would be well advised to make their views known on this," he said. He also said the OECD was keen to move quickly on the changes so that business could have certainty. "The project has only been in existence for a year. It's unusual in international tax terms. There's considerable momentum behind the proposals. The handbook of good practice will be available shortly and that will roll down into legislation quickly." He concludes that we could see changes introduced in October of this year with implementation in the following fiscal year.
MORNING BRIEFS - Europe's biggest investment bank Deutsche Bank is reported by Bloomberg to have bought 680 distressed but-to-let properties from Danish lender Danske Bank. Over half of the properties are in Dublin with the rest in other parts of the country. The mortgages have been on the market for a while with a price tag of around €100m. Danske is in the process of withdrawing from the Irish market.
*** The Scottish independence referendum campaign kicks off formally today ahead of the vote in the middle of September. Supporters claim that voting yes would leave every person in Scotland £1,000 better off in 15 years' time. Opponents believe that a no vote would earn every person in Scotland a "UK dividend" worth £1,400 a year for the next two decades. According to the BBC's sentiment tracker, the percentage in favour of independence stands at 34% with 46% against and don't knows are at a significant 20% of the electorate.
*** The Hong Kong billionaire Li Ka Shing, whose Hutchison Whampoa group recently bought mobile operator O2 here, has made another acquisition. This time it was his Cheung Kong Group which paid $2.2 billion for the Australian natural gas distributor, Envestra. The company owns 23,000km of gas pipelines that supply to customers in Victoria and South Australia.
*** Consumer prices in Japan rose at their fastest pace in 23 years in the month of April - mainly due to a hike in the sales tax from 5% to 8%. The sales tax increase is all part of a policy by the Japanese government to end a spiral of deflation that has been in place for two decades. While it had the effect of driving up prices by 3.2% in the year to April, it was met with a fall in household spending which was down 4.6% in the month of April. Retail sales were down 4.4%.
*** Microsoft's former CEO Steve Balmer has reportedly reached a deal to buy the NBA team, the Los Angeles Clippers. It is understood that he will pay a record $2 billion for the team which was thrown into chaos after its owner Donald Sterling was recorded making racist statements. The deal was negotiated with Sterling's estranged wife, but could face legal obstacles if he opposes the sale.