Proposals being worked on by the Organisation for Co-Operation and Development could make Ireland a less attractive country in which to invest for large technology companies.
The OECD is working on new proposals to curtail the ability of large corporations to avoid tax by shifting profits from one jurisdiction to another. One of the proposals being looked at would restrict the ability of companies to book sales which originated in one country through a company located in another country. Such arrangements, called commissaire arrangements, are widely used by companies including Google which has drawn fire for routing revenues from its UK online advertising sales through Ireland.
Peter Vale, tax partner at Grant Thornton, says the project is all about tackling tax avoidance and re-writing the current global tax rules so that the the regime we have in place is fit for purpose. The way companies do business these days has changed a lot in the last 30 to 40 years, Mr Vale says, adding that there is huge political support behind the Beps project to tackle tax avoidance. A lot of resources has been thrown at the project and no-one can dispute the aspirations behind it, but the tax expert says the "devil is in the detail" and trying to get consensus from 44 different countries - including some non-OECD countries - could prove very difficult for such a wide range of changes.
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MORNING BRIEFS - The UK's largest banks including RBS - the owner of Ulster Bank - have all passed stress tests according to the Bank of England. Following on from the EU-wide stress test, UK stress test covered the eight largest UK banks and building societies to assess their ability to cope with a severe housing market shock. Just one lender, Co-Operative Bank, failed the test and has been ordered to come up with a new plan to address its projected shortfall in capital under the stress scenario.
*** Russia's central bank was forced into an interest rate hike in the early hours of this morning as the rouble fell 10% yesterday its biggest one day drop in 16 years. The Russian currency has lost half its value against the dollar this year, making it the worst performing major currency in the world. The flight of international capital following international sanctions earlier this year has, more recently, been compounded by falling oil prices. Russia, as one of the world's largest oil exporters, has been hurt badly by that. The Russian central bank warned yesterday that if oil prices remained at $60 a barrel for a year Russia's economy could contract by as much as 4.7%.
*** There will be no super-sizing in McDonald's Japanese restaurants as the country copes with a drastic shortage of chips. McDonald's outlets in Japan have been hit by ongoing labour strife which is affecting shipments from 29 ports on the US west coast. That has restricted supplies of french fries. Despite McDonald's resorting to an emergency airlift of 1,000 tonnes of potatoes and sending a further 1,600 tonnes the long way round from the east coast, Japanese customers are restricted to small portions of chips. Japan has also been coping, incidentally with a butter shortage in recent weeks.
