Irish Budget 2017: The Key Implications For International And Irish Business

Author:Mr Andrew Quinn and William Fogarty
Profession:Maples and Calder

The Irish Minister for Finance presented Budget 2017 in the Irish Parliament on 11 October 2016.

The domestic measures announced are generally cautious and modest, against a backdrop of a growing economy.

On the international front, business will be glad to see the Minister recognise and address the challenges and opportunities presented by macro-economic issues like Brexit and a fast evolving international tax environment.

In this regard, the Minister referenced the OECD BEPS project, the EU Anti-Tax Avoidance Directive, tax transparency and other international tax measures that influence the global tax system today.

Encouragingly, the Minister reiterated the primacy of the 12.5% corporation tax rate, and emphasised that Ireland needs to remain competitive, transparent and fair. The Minister also published an important strategy paper titled Update on Ireland's International Tax Strategy, which addresses Ireland's approach on such matters. He also announced the commencement of a review of the Irish corporation tax code from a policy perspective, led by an independent expert, and it is understood that this will include opportunity for consultation by stakeholders. We would encourage our clients to contact us with their viewpoints so that this can form part of that process.

Corporation Tax

As noted, the Minister published an updated version of Ireland's International Tax Strategy, which reaffirms Ireland's "rock solid" commitment to the 12.5% corporation tax rate, implementing the OECD BEPS recommendations and confirms that Ireland will introduce the EU Anti-Tax Avoidance Directive in line with the timelines previously agreed.

While the strategy paper generally affirms the need for coordinated EU action, a more cautious note was sounded in relation to the EU Common Consolidated Corporate Tax Base ("CCCTB"), to be relaunched by the European Commission this year. While Ireland will engage fully in discussions, it is noted that tax remains an area for unanimous decision making and Ireland will assess whether CCCTB is in its best interests or not. Echoing its approach on the EU Commission's Apple Ruling, Ireland continues to disagree with 'inappropriate encroachment of State Aid rules into the core Member State competence of taxation'. It remains to be seen whether Ireland will feel the absence of the UK (post Brexit referendum) as an ally in the EU in the discussions on CCCTB.

An independent review of Ireland's corporation tax code was announced which will be led by Seamus Coffey, from University College Cork. The terms of reference for this review will be published shortly, but will include consideration of the further actions required to ensure Ireland is fully compliant with the OECD's BEPS recommendations.

Section 110 Companies

On 6 September 2016, the Minister announced proposals to amend the tax rules that apply to qualifying companies within section 110...

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