CFA Society

Over 70% of CFA members disagree with the Government maintaining a top rate of tax of 52% for people earning incomes above €70,000, but removal of Double Irish 'will be well received by international markets': CFA Society

Thursday, 16 October 2014 The decision to close off the ‘Double Irish’ to new companies from 2015 and existing companies from 2020 in Budget 2015 was ‘the right thing to do’ according to 84% of members of CFA Society Ireland, the professional body for those involved in investment analysis and portfolio management.

Caitriona MacGuinness, President of the CFA Society Ireland and Portfolio Manager in KBC Fund Management said; “Ireland’s reputation has taken a battering from the international headlines and focus on the ‘double Irish’ over the past number of months. Our members are very clear that we needed to make this change and we believe it will be well received by international markets. By moving proactively, the Government has sent a clear signal in Budget 2015 that despite this change, our corporate tax code will remain competitive in order to continue to attract the world’s best and most successful companies to Ireland”.

Overall while CFA Society Ireland members were positive about the budget, a significant minority - nearly 40% - felt it was too expansive. Despite this, 33% felt the budget would be viewed positively on international markets.

There were conflicting views on the breakdown between revenue and expenditure in the budget. Just over half (55%) felt the government got the balance ‘just right’ in terms of government revenues and expenditure while 30% felt the balance was tilted too much in favour of raising additional revenue and too little in favour of reducing expenditure.

Low to middle income earners, pensioners and the unemployed will benefit most from Budget 2015 according to CFA Ireland members. Over 70% of members disagreed with the Government maintaining a top rate of tax of 52% for people earning incomes above €70,000.

“After seven budgets of austerity and the economy beginning to turn the corner, the Government has chosen to loosen the purse strings and there is no doubt that this will be welcomed by taxpayers. However, our Post Budget Survey indicates that among our members there is feeling that we need continued prudence in the management of the economy. Our debt levels are high and growth in European and global markets remains constrained. As an open economy Ireland remains vulnerable to global economic events”, added Caitriona MacGuinness.

Other countries need to take action on harmful tax deals - Hayes

Wednesday 15 October 2014: Brian Hayes MEP said that other EU Member States need to clean up their tax arrangements following Ireland's removal of the "double Irish" tax deal in yesterday's Budget.

"The removal of the double Irish tax deal is a huge step in a long-running process to improve Ireland's corporate tax arrangements. Other Member States should take note of this and take similar decisive action," said Mr Hayes.

"For example, Britain's tax deal for intellectual property firms accounts for an almost €1bn a year tax break for profits from patented products and processes. Similar arrangements exist in countries such as Luxembourg, Netherlands, Malta and Belgium."

"Ireland has come up against criticism from the European Commission and several EU Member States for its corporate tax policy. In response, we have made significant efforts to improve our corporate tax policy, firstly by introducing the Domicile Levy in 2010, this was followed by a Public consultation which aimed to see tax loopholes shutdown and yesterday we saw the removal of the double Irish," the Dublin MEP added.

"Ireland's international reputation has gained more credibility following yesterday's decision. Our standing in the international tax environment has improved significantly and this is evidenced by both the OECD and the European Commission coming out publicly in support of the effort made.

"It is now time for others to take example from Ireland and curb harmful tax practices. And the focus should not be only on smaller Member States which is often the case, bigger Member States need to be accountable to international tax standards and EU state aid rules," he concluded.

IDA Ireland:

Tuesday 14 October 2014: "IDA Ireland, the foreign investment agency of the Irish Government, today welcomed enhancements to Ireland’s offering to global companies, which will position the country to sustain and win inward investment in the years ahead.

"With employment at overseas companies at a record of over 166,000, today’s Budget measures announced by Minister for Finance, Michael Noonan TD, will further strengthen what Ireland can offer overseas investors.

"IDA Ireland, which works closely with over 1,100 firms from around the world, said it was particularly pleased to see the Irish government once again committing itself firmly to retaining Ireland’s attractive 12.5% corporate tax rate, a core pillar of Ireland's competitive offering.

"More specifically the IDA particularly welcomed new measures including:
* A new “best in class” Knowledge Box to be legislated for
* The R&D tax credit system has been broadened and made more attractive to companies
* An improved Special Assignee Relief Programme (SARP) will continue to attract key decision makers into Ireland
* Reduction in the top level of income tax

"The IDA also welcomed pro-active changes to Ireland’s tax residency rules which provide clarity for companies operating in Ireland or seeking to invest in Ireland in the future. This change confirms Ireland’s international reputation as a country with a stable, transparent and fair taxation regime by bringing clarity to how Ireland’s tax rules interact with tax regimes present elsewhere. Ireland's tax regime has been built around having economic substance, in terms of employees, payroll and capital investment.

"The changes to the residency rules, which will be introduced from the 1st of January 2015, will not alter the core attribute of Ireland's tax offering, which will remain highly competitive. Transitional arrangements will apply to companies already incorporated in Ireland lasting until December 31st, 2020.

"Speaking today the Chief Executive Officer of IDA Ireland, Mr Martin Shanahan said:
“Ireland's credentials as a pro-business, pro-investment location are well known worldwide, and today's changes will further cement those credentials. The Government and Minister for Finance have today added to Ireland's competitive offering in the international marketplace and IDA intends to market the new offering fully in the period ahead. Stability has characterised Ireland’s taxation regime over many decades. The roadmap announced today provides certainty to companies operating in Ireland, or seeking to invest in Ireland, for years to come. In providing this clarity, against the backdrop of ongoing international initiatives, we are confident today's changes will help to grow Ireland's investment pipeline further and boost job creation''.

FSI

International financial services industry welcomes development of new strategy
Improvements to Special Assignee Relief Programme will help attract senior staff and new business to Ireland

Tuesday 14 October 2014: Financial Services Ireland (FSI), the IBEC sector association that represents the IFSC, welcomed the preparation of a new strategy for the international financial services industry.

“The international financial services industry has created over 6,000 jobs across the country over the last five years, and it can grow even faster”, said FSI Director Brendan Bruen. “We need to seize opportunities by being the best place to put new business. A new strategy should coordinate public and private efforts with the resources needed to be competitive.”

“The recent appointment of Simon Harris as Minister of State with responsibility for the IFSC is an opportunity to centralise and streamline marketing and decision-making for the industry”, said Bruen.

“Improvements to the Special Assignee Relief Programme (SARP) are essential. Persuading highly-skilled personnel to work in Ireland is crucial to attracting new business here. These staff generate new jobs and tax revenue which would otherwise go elsewhere. Many large employers in the industry were originally set up as niche operations with a handful of skilled staff.”

Baker Tilly Ryan Glennon - Multi Nationals – Clarity on “Double Irish” Welcomed

Thursday 15 October 2014:Following the Minister for Finance’s announcement ending of the Double Irish tax structure, International media have extensively covered the change.

Aidan Byrne, Tax Partner, Baker Tilly Ryan Glennon said “The key point is that under existing Irish law an Irish company could become non-resident through management and control being exercised in a foreign jurisdiction, even a jurisdiction with which we do not have a double tax treaty, as long as that company was associated with an Irish resident trading company”.

With effect from 1st Jan 2015, all Irish companies will be deemed Irish resident, regardless of management and control. For existing companies using this structure, it will be possible to continue using the structure until the end of 2020.

“What has not been highlighted, is the proactive manner in which the Irish government are facing into the challenges that the forthcoming OECD BEPS project will bring to all countries who compete in the international tax arena” said Aidan.

Minister Noonan has stolen a march on his competitors by setting out his stall in relation to what can be expected in Ireland over the next few months including:

1. A significant improvement in our SARP regime, bringing it in line with best international practise

2. Confirmation of the certainty over the 12.5% rate, which bearing in mind the substance requirements that BEPS will introduce, becomes even more key

3. the introduction of a Knowledge Box, not a Patent Box, which is more restrictive, with the promise of a low and sustainable rate of tax which will prove very attractive to mobile international businesses.