Businesses here need easy-to-follow guidance on how to apply rules of global tax agreement, said Shane Wallace
Shane Wallace, who is also a tax and legal partner in Deloitte, said the Government also needs to prioritise stability and predictability in the corporate tax regime. Consistency is critically important at a time of global volatility, he added, and any uncertainty in Ireland would be a big impediment for investors.
He noted that, just when everyone thought that a reformed international tax framework had been settled, the rules governing the taxation of the world’s largest companies “has been plunged into disarray”.
While 140 OECD countries, including Ireland, have signed up to a new global tax agreement, the US government has rejected Pillar 2, which would impose a minimum 15pc tax on large corporations in every jurisdiction.
While welcoming the ongoing talks within the OECD on how to align Pillar 2 with the US’s rules, Mr Wallace said that businesses in Ireland must still prepare to register for the top-up tax, bringing their rate to 15pc, “and they need guidance on the practical application of the new rules”.
The Irish Tax Institute would continue to engage with the Department of Finance and Revenue on the issue, vowed Mr Wallace, who is becoming its the Institute’s 50th president.
Ireland must reinforce its reputation as a reliable and transparent jurisdiction
He said the Government must avoid reactionary legislative changes that are having knock-on effects in areas like real estate investment and construction.
“At a time when international rules are shifting, Ireland must reinforce its reputation as a reliable and transparent jurisdiction – one where investors can make long-term decisions with confidence,” he said.
He called for significant support for the SME sector in next month’s Budget: “We can do more to encourage and incentivise investment. For example, we pride ourselves on being competitive on tax, yet we have a 33pc rate on capital gains tax. We do have reliefs but, as a starting point, that rate is very, very high compared to other OECD countries.”
Mr Wallace said the Government needed to “enhance Ireland’s attractiveness as a location for foreign direct investment, and create the right environment for an ambitious, innovative and export-oriented SME sector, while bolstering safeguards for taxpayers and increasing efficiency in the tax collection system”.
In a pre-Budget submission, the Institute called for an increase in the R&D tax credit, the expansion of the definition of qualifying expenditure, and changes to outsourcing rules.
Mr Wallace said that October’s Global Tax Policy Conference, hosted jointly by the Institute and the Harvard Centre for International Development, would serve as a platform for experts, policymakers and practitioners to discuss these challenges, as well as broader issues of fairness, compliance, and sustainability.
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