Ireland would introduce key international tax measures in Finance Bill 2018 to comply with the EU Anti-Tax Avoidance Directive, Finance Minister Paschal Donohoe said in his 2019 Budget Statement released on October 9. The Finance Bill 2018 is due to be published on October 18.
New CFC rules
The Minister said that Ireland would introduce new controlled foreign corporation (CFC) rules in the Finance Bill 2018, in line with the EU Anti-Tax Avoidance Directive (ATAD). The new rules would apply for accounting periods beginning on or after January 1, 2019.
“CFC rules are an anti-abuse measure, designed to prevent the diversion of profits to offshore entities in low- or no-tax jurisdictions. CFC rules are traditionally a feature of territorial tax regimes. As Ireland has a worldwide tax regime, CFC rules have not previously been a feature of the Irish corporate tax regime,” the Government noted.
Exit tax regime
Next, Ireland would also introduce a new ATAD-compliant exit tax regime with effect from October 10, 2018. “The exit tax would apply at a rate of 12.5 percent on any unrealized gains arising where a company migrates or transfers assets offshore, such that they leave the scope of Irish taxation,” he noted.
According to the government, “early introduction of this measure will provide certainty to businesses currently located in Ireland and considering investing in Ireland in the future.”
Corporate tax rate, transfer pricing provisions
Finally, the Minister noted that Ireland’s “longstanding” 12.5 corporate tax rate “will not be changing.” The Minister also noted that the Government is committed to a review and update of Ireland’s transfer pricing provisions in 2019 to ensure Ireland’s tax system is in line with new international best practices.
Donohoe said: “Ireland’s Corporation Tax Roadmap which I published in September, takes stock of the changing international tax environment, outlines the actions Ireland has taken to date, and further actions to be taken. This is a time of significant global change for business, and my focus is on maintaining a competitive, outward-facing business environment, while ensuring our tax regime is transparent, sustainable, and legitimate.”