close

Newsroom

Double Irish tax loophole abolished

30th October 2014

MGI World Ireland is seeking to close a key tax loophole.

Ireland will close its controversial tax structure that allows large multinational firms to shift profits overseas to reduce liabilities. The so-called Double Irish tax scheme will be closed to new entrants next year and phased out by 2020.

The system exploits variations in tax residency rules for companies operating internationally. It comes amid the growing clamour for tax reform by the Organisation for Economic Co-operation and Development (OECD) and G20.

In future all companies registered in Ireland will have to pay their taxes in the country. But the country’s ultra-low 12.5 per cent corporation tax will stay.

"The 12.5 per cent tax rate never has been and never will be up for discussion," Irish finance minister Michael Noonan said. "The 12.5 per cent tax rate is settled policy. It will not change."

Ireland has come under growing pressure from the US, Europe and OECD, which are working on reform of international tax laws and treaties to clamp down on avoidance.

Under the Double Irish system it’s possible for companies to shift royalty payments for intellectual property to a firm in Ireland and then to an Irish-registered subsidiary based somewhere with no corporate income tax. In some cases the companies can cut their tax bill to as low as two per cent. High profile US technology and pharmaceutical companies have been the most obvious users of this scheme.

Accountants have supported the approach. Chartered Accountants Ireland said it backed moves to secure the corporation tax regime by re-aligning the approach to the taxation of multinationals.  

“The 12.5 per cent rate doesn’t mean a low tax take. For 2014, corporation tax makes up 11 per cent of all tax revenue – eight times as much as local property tax for example. That tax has to be secured above all else for future years” said Brian Keegan, the body’s director of taxation.

Read more on Industry news and UK & Ireland

MGI World MGI Worldwide CPAAI 2020 UK & Ireland Update

Are you up to date with what’s been happening in the MGI UK & Ireland region? Watch a quick report from the region, recorded during the 2020 Virtual Global Meeting

15th February 2021

Paul Winder, Regional Coordinator for the UK & Ireland brings us up to speed with news from the...

MGI World Europe map as background with MGI Europe logo overlaid

Missed the December edition of the IAB? Featuring insightful contributions from our members in Sweden and Russia and it’s not too late to catch up!

28th January 2021

MGI Worldwide CPAAI members continue to contribute to the global accounting community in December’s...

MGI World MGI Vannucci e Associati's Anti-Pandemic Measures for Foreigners article

Are you aware of law changes brought about by COVID in Italy? Read on for information on the Italian Government's anti-pandemic measures for foreigners

23rd December 2020

If your firm has clients with interests in Italy, be sure to catch up with all the latest laws and...