Tax in Focus Peter Vale Q

Peter Vale, a Tax Partner in Grant Thornton Dublin, spends most of his time working within either international tax or financial services tax. In some cases the two overlap. The nature of Peter’s work means that he has considerable interaction with other Grant Thornton offices, primarily in the US and UK, although often in other jurisdictions also.

Tax Partner at Grant Thornton Dublin International Tax Changes in Ireland

“Ireland’s tax landscape is well recognised as a global leader in providing an attractive location for multinationals to invest in their global operations. However Ireland’s story is a much more rounded tale than simply facilitating the tax planning desires of multinationals”

What more can you tell us about your specific practice?

Grant Thornton Ireland can trace its history back to 1899. Today, the firm comprises over 500 people operating from offices in Dublin, Cork, Galway, Kildare and Limerick. In addition to audit and tax, we provide planning, corporate finance, corporate recovery and insolvency, forensic and investigation services, business risk services, computer assurance, IT consultancy, corporate secretarial services, family business consulting and personal tax and financial planning consulting.

What I think is most impressive about Grant Thornton’s growth in recent years is how we have managed to win significant work in the MNC space without losing sight of that part of the market that helped the firm grow so successfully for so many years.

Q

What characterises Ireland’s tax landscape at present?

Ireland’s tax landscape is well recognised as providing a compelling reason for multinationals to consider Ireland as a location for their global operations. However Ireland’s story is a much more rounded tale than simply facilitating the tax planning desires of multinationals. We can also point quite rightly to a developed infrastructure, an educated workforce and a strong supply of available labour.

Unquestionably we are looking at changes coming down the tracks in terms of the shape of the global tax landscape. How groups operating across borders calculate their taxable profits is likely to undergo a transformation. There are different drivers of these changes, with the EU, US, and OECD all involved in the process, but all pulling in slightly different directions.

What is clear, however, is that change is coming. The question is what, if anything, has Ireland got to fear from change? Some aspects of the OECD’s work would frighten Ireland,

particularly any link

between a group’s taxable profits and its customer bases, with such a measure likely to adversely impact on smaller countries. However the key theme in the OECD’s reports is substance, with taxable profits being linked to real activity. This presents significant opportunities for a country such as Ireland where large MNCs already have a sizeable presence. There is the possibility that groups with their Intellectual Property currently offshore will look to move it to an onshore location such as Ireland, either cementing or creating jobs here.

Q

What makes Ireland an attractive corporate destination?

I think one of the most interesting aspects of surveys of MNCs that have set up operations in Ireland is that tax is the reason that they come here originally but tax is not the reason that they stay here. Access to internal EU markets has been flagged as the number one reason why companies remain in Ireland. For me, this is the perfect scenario, as other countries can quite easily match us on the tax front, but may struggle to easily replicate features such as: • Quality infrastructure • English speaking workforce • Access to labour • Highly regarded education system • Significant local knowledge and expertise as a result of market leading position in

sectors as diverse as

technology, financial services and pharma;

The last factor is a really significant one. For example, with so many leading technology companies in Ireland, it

Q

What reforms have been put forth by the Irish Finance Bill?

From an international tax perspective, the change in relation to “Stateless” companies was the most significant feature of the recent Finance Bill. The specific provisions were important not because they changed the tax landscape but because of the message they sent to the global tax community. How this message was delivered was equally important.

I think the Minister got it exactly right in terms of being seen to close down what was viewed as a loophole in Irish tax legislation while ensuring that Ireland continues to be regarded as offering a competitive tax landscape. For the vast majority of MNCs in Ireland, the changes will have no impact as companies with no place of tax residence are very unusual. However, the overseas reaction to the changes was positive, lauding the “loophole” closure without expressing a view that Ireland was closed for tax business.

becomes much easier to attract the next one. Setting up your European operations in Ireland has become a bit like buying an IBM years, ie the safe option.

Contact: Peter Vale Partner

Tel: 353 1680 5925 Email: peter.vale@ie.gt.com Web: www.grantthornton.ie

37