Budget 2014 saw the publication of Ireland’s International Tax Strategy which sets out the objectives and details of Ireland’s corporate tax regime.  The strategy reiterates the Irish Government’s steadfast commitment to the 12.5% corporate tax rate. 

The Strategy also endorses Ireland’s commitment to the OECD Base Erosion Profit Shifting (BEPS) project and welcomes the opportunity to fully participate with all states in the global debate on aligning tax and real economic activity.  However, Ireland is not the sole solution and while Ireland will enthusiastically take part in any global debate it will not take any steps or acts in isolation.

The Strategy also acknowledges that companies cannot be stateless in terms of their place of tax residency.  In this regard, the Finance Bill, which was published on 24 October, proposes changes to Irish company residence rules.  As currently drafted, the Bill provides that where a company is incorporated in Ireland and is managed and controlled, for example, from the US, and is neither tax resident in the US, Ireland or any other country, it will be deemed to be tax resident in Ireland.  The Bill is expected to be enacted before the end of the year.

What does this mean for our clients?
This proposed change in the law should not impact the overwhelming majority of multinational companies operating in Ireland.  However, a company which is affected by the change in legislation and which does not wish to become tax resident in Ireland has until 1 January 2015 to ensure it becomes tax resident in another country.

As the global debate on tax policy progresses, Ireland will be at the table ready to constructively engage on the issues whilst all the time cogently defending and protecting Ireland’s interests.

Should you have any queries, please contact the William Fry Tax Department.