Summer Workshops

Just to remind interested parties that we are running leadership and communications workshops throughout July and August and still have a couple of open spots. We usually programme over weekends but in particular circumstances we can be flexible.

Dear Deputy lets talk Tax Certainty

Dear Deputy, The future jobs, tax revenues and economic growth that we expect to derive from Foreign Direct Investment are being put at risk due to recent movements by Revenue against the principle of tax certainty.

Tax certainty, which is the ability of an individual or entity to accurately and confidently assess and predict how much tax they will pay over a set period of time, is considered by both the OECD and the IMF to be one of the cornerstone principles of a fair and just tax system. Beyond that it is an integral principle for businesses, who must be able to tell how much tax they should pay in any given territory in order to accurately assess its suitability for investment, particularly long-term investment. A study of large, international investors, carried out by the Economist Intelligence Unit, stated that 87% of study participants rated fiscal certainty as important when making decisions as to FDI.

In countries in which tax certainty is part of the system it is possible for companies to invest large sums, over long periods, as they have the capability to trust that the territory in which they operate will deal fairly and justly with them. Ireland has historically held the principle of tax certainty as a key competitive advantage, which we have drawn on heavily in attracting Multi-National Corporations [MNCs] into the State. By positioning the 12.5% rate as a constant fixture of Irish political life, rather than merely as a low-rate of tax, the Irish state has been able to move beyond the idea of Ireland as a low corporate tax economy and onto the idea of Ireland as a place where you can invest for 30 years because you have certainty as to what you will pay on any investment. As the Taoiseach himself noted on his trip to Washington in March, where he was talking to the US Chamber of Commerce, “There are actually countries in the EU that have a lower tax rate than us…I think what we offer is certainty…and I think that gives investors or potential investors that certainty you need if you’re making the 20 or 30 year multibillion-euro investment in an economy. You want to know the fundamentals of those policies are going to stay the same.”

Unfortunately, recent developments in Ireland have undermined the principle, and the good work that the Irish state and politicians have done to uphold that principle. We believe these developments hold the potential to cause significantly harm, both reputational and economic, to Ireland.

We are aware of multiple recent instances in which Revenue has upwardly reassessed the tax payments of an MNC, despite those companies having paid tax at an accepted rate for years without Revenue raising any issues with their payments, and which would therefore have a legitimate expectation they are paying the correct rate of tax. In some of these instances, the MNCs in question reached out to Revenue and requested clarification as to why their tax payments were reassessed, and were simply told that Revenue would provide no further information and that the MNCs could appeal the decision if they so wished.

Here we are not talking about companies which have obviously tried to defraud or short-change the Irish taxation system, in which case the upward reassessment may have been a legitimate and reasonable response, but rather companies who have acted in good faith, who sought direction and advice in order to be tax compliant and now face a bill for “underpayment” along with interest and penalties. This is not due to an error on their part, but rather because Revenue simply changed its mind as to how their taxation should be paid

Two recent examples of this are Analog Devices, who employ 1,200 people in Limerick, being served with a notice of assessment for €43 million and Perrigo, which is headquartered in Dublin as a result of acquiring Elan in 2013, and faces a fine of €1.6 billion. Both of these cases are under appeal.

This new, aggressive approach to upward reassessment of previously paid taxation has not gone unnoticed abroad. The Hill, an influential paper covering Washington and American political affairs, has covered the issue, in a manner frankly not beneficial to Irish interests, and we in the EBI have fielded multiple queries from American think-tanks and individuals concerned that Revenue’s new behaviour could be harmful to American MNCs headquartered within Ireland and who are concerned about the potential impact of this behaviour on planned expansion and job creation.

The Fiscal Assessment Report published earlier this month by the Irish Fiscal Advisory Council highlighted the dependence of the Irish state upon a very small number of corporate entities, with the ten largest corporate entities paying €5 billion of the total €10.4 billion gathered in corporation tax receipts in 2018. That of course doesn’t include the impact of the 229,057 people directly employed by multi-nationals, 58% of whom are based outside Dublin. As Minister Donohoe very correctly pointed out in 2016, “One in five workers in the private sector work for companies that are located here in Ireland due to foreign direct investment.”

Given the scale of employment by MNCs Revenue’s movements against tax certainty are not merely harmful to MNCs, but rather represent a real and tangible threat to the livelihoods of Irish men and women, all across the country. Revenue’s newfound vigour for unorthodox and aggressive reassessments has undermined a key competitive advantage of this country, an advantage which played a substantial role in the prosperity that this country has achieved over the past decades, and an advantage which politicians, of all political stripes, have fought hard to ensure remained in place.

Our concern is that Revenue has been moving, and will continue to move, towards a position which is harmful to Irish interests, Irish economic growth, and offensive to the principles that should underpin a just and equitable taxation system, both for corporate entities and for private citizens.

Standing as we are on the edge of a No-Deal Brexit, and aggressive tax moves from President Trump to encourage repatriation of US companies overseas, that Revenue should now seek to pursue a policy which undermines our hard-won reputation as one of the most attractive countries in the world for large-scale long-term investment, would seem to be short-sighted and deeply misguided

The Board : Edmund Burke Institute

Digital Tax Coalition Open Letter to the G20

June 27, 2019

Dear G20 Finance Minister,

On behalf of billions of taxpayers and consumers around the globe, we, the undersigned, urge you to oppose international efforts to weaponize global conversations about digital commerce to tax tech companies. Imposing higher taxes on tech companies would lead to higher prices on consumers and force millions of small businesses to scale back their online advertising activities. Consumers, businesses, and governments would be better served by a light-touch tax and regulatory regime that encourages growth and innovation.

In the aftermath of the June 9th meeting of G20 finance ministers in Fukuoka, Japan, households and businesses across the globe have expressed concern that the proposed “closing of loopholes” in digital taxation will entail higher prices on digital products such as search engines and social media platforms. A December 2018 PwC report found that, by most estimates, a significant share of any new digital tax is likely to be passed onto consumers in the form of higher prices. This does not bode well for the billions of global citizens forging important business connections on Facebook or furthering their educations via Google and countless online academies.

Government meddling in the digital domain would only increase barriers to entry for startups looking to compete with more established tech companies. Virtually every digital service tax proposal envisions a tax based on revenues, regardless of the level of cost that companies incur. Young companies with a sudden influx of consumers and investors may still have growing pains ahead of it, such as network buildout costs and regulatory compliance issues. Taxing these start-ups will make it harder to overcome these challenges and compete for consumers’ attention and dollars.

Countries such as the United Kingdom and Spain will soon implement digital service taxes, and assure their worried citizenries that only the largest, most financially successful companies will foot the bill. Yet in the tech sector, companies can “go viral” very quickly, and the prospect of hitting a “tax wall” can deter investors from making the necessary moves to support the next social media or search engine giant. If digital service taxation becomes a global phenomenon, the tech sector’s upstart culture of innovation will give way to a placid environment dominated by just a few companies. To keep the digital domain vibrant and responsive to the needs of billions of global consumers, we strongly urge you to oppose any international regime of digital service taxation.

Sincerely,

Tim Andrews Executive Director IGO Watch

Dr. Raza Ullah Hon. President Alternate Solutions Institute (Pakistan)
Grover Norquist President Americans for Tax Reform (USA)

Dr. Barbara Kolm Director Austrian Economics Centre (Austria)
Brian Marlow Executive Director Australian Taxpayers’ Alliance (Australia)

Graham Young Executive Director Australian Institute for Progress (Australia)

Bjorn Tarras-Wahlberg Chairman Asia-Pacific Taxpayers Union

Steve Pociask President / CEO The American Consumer Institute (USA)

Norm Singleton President Campaign For Liberty (USA)

Scott Hennig President and CEO Canadian Taxpayers Federation (Canada)

Andrew F. Quinlan President Center for Freedom and Prosperity (USA)

Jeffrey Mazzella President Center for Individual Freedom (USA)

Rocio Guijarro Saucedo Gerente General Cedice Libertad (Venezuela)

Tomasz Kołodziejczuk Centrum Kapitalizmu (Poland)

Andrés Barrientos Executive Director Ciudadano Austral Foundation (Chile)

Tom Schatz President Citizens Against Government Waste (USA)

Iain Murray, Vice President for Strategy and Senior Fellow, Competitive Enterprise Institute (USA)

Yaël Ossowski Deputy Director Consumer Choice Center (International)

Katie McAuliffe Executive Director Digital Liberty (USA)

Gary Kavanagh Executive Director Edmund Burke Institute (Ireland)

Jason Pye Vice President of Legislative Affairs FreedomWorks (USA)

Federico N. Fernández President Fundación Internacional Bases (Argentina)

Roxani Kargakou Managing Partner Greek Liberties Monitor (Greece)

Jon Coupal President Howard Jarvis Taxpayers Association (USA)

Federico Rabino Director Ejecutivo Instituto Fernando de la Mora (Paraguay)

Tom Giovanetti President Institute for Policy Innovation (USA)

Masaru Uchiyama President Japanese for Tax Reform (Japan)

Mattie Duppler Senior Fellow for Fiscal Policy National Taxpayers Union (USA)

Carl Szabo Vice-President & General Counsel Netchoice (USA)

Gia Jandieri Vice-President New Economic School (Georgia)

Jordan Williams Executive Director New Zealand Taxpayers Union (New Zealand)

Lorenzo Montanari Executive Director Property Rights Alliance (USA)

Anders Ydstedt Chairman Svensk Tidskriff (Sweden)

Michael Jäger Generalsekretär Taxpayers Association of Europe (Europe)

David Williams President Taxpayers Protection Alliance (USA)

John O’Connell Chief Executive The Taxpayers’ Alliance (United Kingdom)

Maryan Zablotskyy Director Ukrainian Economic Freedoms Foundation (Ukraine)

Nisa Bahçeli President Vergi Araştırmaları Topluluğu (Turkey)

James L. Martin Founder/Chairman 60 Plus Association (USA)

Saulius “Saul” Anuzis President 60 Plus Association (USA)