Ireland to Phase Out ‘Double Irish’ Provision
Ireland has been a popular destination for companies which want to save on corporate taxes. On Tuesday, the Irish government answered to the noisy ridicule that was raised due its business-friendly tax arrangements and shut down a loophole which was being used by multinational tech giants such as Google.
Of late the EU and the Obama administration have being quite active and blunt regarding tax-avoidance loopholes that are used by the multinational companies and also have been vocal about the countries which support them.
A broad investigation is being conducted by the European Commission to establish the relationships that exist between the multinational companies and the most probable tax havens like Luxembourg, Netherlands and Ireland.
In the last couple of decades, much of Ireland's economic development and job growth have been attributed to its low corporate tax rate and other incentives which lure overseas companies like Microsoft, Google, Apple and Abbott Laboratories.
However the government of Ireland is now phasing out a system which is called a "double Irish" provision. Under this arrangement corporations which have operations running in Ireland could make royalty payments for intellectual property to a separate Irish-registered subsidiary. However the subsidiary, though included in Ireland, characteristically has its base in a nation where there is no corporate income tax.
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