Brexit
A report first published in the June edition of the Irish Tax Monitor in Finance Dublin magazine highlights some key considerations arising from the recent UK Brexit Decision
This issue is of critical importance to the stability of Exchequer revenues, as 10 companies account for 41% of all corporation tax and 80% of all corporation tax is paid by foreign owned multinational corporations. Ireland should work quickly to reassure international investors that Ireland remains an attractive location from a tax perspective.
Sonya Manzor at William Fry said that the problem with Brexit is uncertainty and the full impact of a vote for Brexit will not become clear for some time (likely to be several years). Undoubtedly a Brexit will have many UK based companies considering how to pursue an EU focussed strategy from outside the EU. From Ireland’s perspective, ensuring that we continue to enhance our attractiveness for inward investment will be hugely important, while also ensuring that negotiations and agreement on our future relationship with the UK are concluded as early as possible.
Response to Brexit
Jim McDonnell at PwC said that Ireland’s specific response to a Brexit will evolve as the details of the outcome of negotiations between the UK and the EU become apparent – something that will not happen for some time after the referendum, given that the Treaty of Lisbon provides for a 2 year negotiation period – and longer if agreed by EU member states.
The UK has already been competing more aggressively, not only with Ireland but with other EU states with attractive corporate tax regimes. Ireland needs to respond to this by continuing to enhance its tax offering on a number of fronts – personal tax for inbound assignees (SARP), R&D tax credits, K&DB regime, the limited partnership legislation for investment platforms, etc.
Ireland must also be careful on how it implements certain elements of the BEPS and EU Anti-Tax Avoidance Directive, at least to ensure that Ireland remains competitive with other locations in Europe (including the UK) and further afield.
Mazars’ Ken Killoran said that Ireland should have a fiscal plan that is focussed on the UK Brexit process. And that Ireland should monitor and participate in negotiations between the UK and the EU in relation to the model adopted around exit.
This report first appeared published in the June edition of the Irish Tax Monitor in Finance Dublin magazine .
June 2106 finance Dublin