Post by earl on May 2, 2008 16:25:27 GMT
The Republic of Ireland's minister for finance has defended its corporation tax regime after moves by UK multinationals to redomicile there for tax reasons.
International Power is the latest British company to say it is considering moving its corporate headquarters away from the UK because of looming tax reforms, potentially following Shire Pharmaceuticals and United Business Media (UBM), which are planning to switch their tax domiciles to Ireland.
In a statement to The Daily Telegraph, the country's finance minister, Brian Cowen, said it would be "inappropriate.?.?. to comment publicly on the tax matters of an individual company", but added: "I would make the following general points.
"Over the past decade, this government has pursued a consistent strategy of maintaining a low tax burden on income, both of individuals and of companies so as to support continued sustainable economic growth and social progress.
"Ireland's corporate tax system is transparent. Some other countries have high nominal rates of corporation tax but much lower effective rates due to the use of various base narrowing devices. This is not how the Irish system operates - it is relatively simple, has a wide base and is deliberately transparent." He said Ireland did not support harmful tax competition, and added: "We do not encourage so-called 'brass plate' operations which seek to simply avail of our low tax rates. We want to see real substance in investment in Ireland.
"For this reason, while our corporation tax rate on trading activity is 12.5pc, our corporation tax rate on passive income is 25pc."
Not only does Ireland offer lower tax rates than the UK, which has a headline corporation tax rate of 28pc, but it does not seek to tax the overseas income of an Irish-based multinational. In contrast, many UK corporations fear that the Government is preparing to withdraw valuable exemptions to the taxation on profits they make abroad.
International Power, which owns power stations in 20 countries and makes the lion's share of its profits outside the UK, is looking at relocating to countries such as Ireland and Switzerland.
Another FTSE 100 member, ITV, said it was watching developments as HM Treasury prepares a summer paper on the way it taxes companies' foreign profits.
WPP chief executive Sir Martin Sorrell warned this week he might relocate the advertising group, and rival Aegis said companies would "have to look at" moving domicile if it created better shareholder value.
International Power is the latest British company to say it is considering moving its corporate headquarters away from the UK because of looming tax reforms, potentially following Shire Pharmaceuticals and United Business Media (UBM), which are planning to switch their tax domiciles to Ireland.
In a statement to The Daily Telegraph, the country's finance minister, Brian Cowen, said it would be "inappropriate.?.?. to comment publicly on the tax matters of an individual company", but added: "I would make the following general points.
"Over the past decade, this government has pursued a consistent strategy of maintaining a low tax burden on income, both of individuals and of companies so as to support continued sustainable economic growth and social progress.
"Ireland's corporate tax system is transparent. Some other countries have high nominal rates of corporation tax but much lower effective rates due to the use of various base narrowing devices. This is not how the Irish system operates - it is relatively simple, has a wide base and is deliberately transparent." He said Ireland did not support harmful tax competition, and added: "We do not encourage so-called 'brass plate' operations which seek to simply avail of our low tax rates. We want to see real substance in investment in Ireland.
"For this reason, while our corporation tax rate on trading activity is 12.5pc, our corporation tax rate on passive income is 25pc."
Not only does Ireland offer lower tax rates than the UK, which has a headline corporation tax rate of 28pc, but it does not seek to tax the overseas income of an Irish-based multinational. In contrast, many UK corporations fear that the Government is preparing to withdraw valuable exemptions to the taxation on profits they make abroad.
International Power, which owns power stations in 20 countries and makes the lion's share of its profits outside the UK, is looking at relocating to countries such as Ireland and Switzerland.
Another FTSE 100 member, ITV, said it was watching developments as HM Treasury prepares a summer paper on the way it taxes companies' foreign profits.
WPP chief executive Sir Martin Sorrell warned this week he might relocate the advertising group, and rival Aegis said companies would "have to look at" moving domicile if it created better shareholder value.