G20 crackdown 'boosts corporation tax drive'
Expert insists tighter laws will help region to attract global firms
Published 22/07/2013 | 01:30
A plan to clamp down on tax avoidance by global companies bolsters the campaign to devolve corporation tax-setting powers from Westminster to Stormont.
That's the view of KMPG's head of tax in Belfast Eamonn Donaghy (below) who believes that tighter tax laws will mean the draw of a low tax region will be enhanced if new laws are introduced.
"In many ways any new laws help the case for lowering corporation tax here because it's going to force people to locate profitable bases in a low tax jurisdiction," he told the Belfast Telegraph.
Mr Donaghy was speaking after a meeting of the G20 group of leading nations in Moscow saw the unveiling of the plan thought up by the Organisation for Economic Co-operation and Development, the international group charged with helping governments tackle the economic, social and governance challenges of a globalised economy.
There had been concerns that a tax avoidance clampdown would dilute the benefits of a lower large business tax in Northern Ireland but Mr Donaghy insisted the opposite is true.
He's been a vocal leader in the campaign for devolving tax-setting powers so that the current rate of 23% can be cut to 12.5%, the same as the Republic.
If that were to take place, Northern Ireland could then theoretically compete for inward investment on a more level playing field with Dublin.
And more stringent tax laws can only bolster the case with Prime Minister David Cameron, who has said he won't make a decision on the issue of devolving corporation tax-setting powers to Northern Ireland until after the referendum on Scottish independence next year.
Tighter laws will rule out the chances of companies "brass-plating" their businesses, something which has become more apparent over the last few months after the likes of Amazon, Google and Starbucks were found to be paying extremely low rates of tax by exploiting loopholes in different jurisdictions.
Mr Donaghy said with a lower tax rate and tighter rules, Northern Ireland will attract companies who will set up profit bases where goods are made or services provided, a move that will help boost the economy here.
He said: "It's about 'significant people functions', somewhere the goods are going to be made, where the research is going to be carried out. If you've got that in a low tax jurisdiction then you've the right to declare your profits there."
The current rate of corporation tax in Northern Ireland12.5%
The Irish Republic's corporation tax rate which campaigners want to replicate here15-point plan
Being brought in by the OECD to make tax avoiders pay their fair share