By Daniel Hunter
The so-called "Double Irish" tax loophole which is used by the likes of Apple, is to be closed, according to Ireland’s finance minister Michael Noonan.
Mr Noonan announced the closure of the loophole when he delivered the country's budget today (Tuesday).
The UK Chancellor George Osborne last month announced plans to crackdown on the tax strategies employed by big companies. Speaking at the Conservative Party conference, Mr Osborne said: “Some of the biggest technology companies in the world...go to extraordinary lengths to pay little or no tax here...We will put a stop to it.”
Apple and the Irish government have come in for huge criticism for the tax arrangement which sees the tech giant pay less corporation tax than other companies. Ireland's corporate tax is set at 12.5%, but the 'double Irish' loophole allows firms like Apple to move the majority of its taxable income from an operating company in Ireland to another Irish-registered company in an off-shore tax haven.
The European Commission last month launched an investigation into the tax arrangement between Apple and Ireland. It said that it amounts to state aid, which is illegal.
When the investigation was launched, the Irish government's department of finance denied any wrongdoing.
Tasc, the Dublin-based, centre-left economic thinktank, said the publicity of the 'double Irish' loophole may have damaged Ireland.
Nat O’Connor, Tasc’s research director, said: “The negative international view of Ireland’s excessive flexibility around corporation tax has probably worsened the country’s reputation. Instead, Ireland needs to highlight the many other reasons why investment here is attractive, including our English-speaking, well-educated young workforce. Ireland also needs to rebalance the economy in favour of indigenous companies and reduce reliance on foreign direct investment.”
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