Minster for Finance Michael Noonan has confirmed what has been long suspected on today’s budget speech: the notorious ‘Double Irish’ tax avoidance measure will come to an end in 2015.
The minister said that arrangement would no longer be allowed for new companies coming here from the start of 2015, but that companies with tax arrangements that used the facility would have until 2020 to wind up usage.
However, the minister reiterated the commitment to the 12.5% corporation tax rate.
“The 12.5% tax rate never has been and never will be up for discussion,” said Noonan. “The 12.5% tax rate is settled policy. It will not change.”
The minister outlined a new scheme for fostering development of intellectual property here called the ‘knowledge box’, which broadly speaking is similar to what have been referred to as patent box schemes in the likes of the UK.
The basic concept is to offer a range of incentives, including tax breaks, to companies that develop new technologies here. The aim is to ensure that the job creation from such incentives will offset any loss in direct taxation.
Apart from the UK, Belgium and the Netherlands have also introduced such schemes.
While the measure to eliminate the Double Irish will no doubt go some way toward pleasing both Berlin and Washington where there has been no shortage of criticism, the reaffirmation of the 12.5% rate will no doubt continue to rankle.
However, a report in the Irish Times suggested that resistance to change on the Double Irish facility was coming more from the pharmaceutical industry than the tech sector.
The report by Arthur Beesley and Cliff Taylor said that the pharmaceutical lobbyists were complaining at the proposed four year phase out plan, which seems to be borne out by the announcement of an effective five years to end usage of the facility.
For full details of the tax changes, see budget.gov.ie
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