By Doug Connolly, MNE Tax
The Irish Department of Finance on November 5 launched a public consultation on the introduction of new corporate tax rules applicable to outbound payments of interest, royalties, and dividends. The measures would deny deductions or impose withholding taxes in certain circumstances.
The consultation is intended to help inform the framing of legislation that would target aggressive tax planning and seek to prevent double non-taxation relating to outbound payments. Taking into account the feedback received from the consultation, the government expects to introduce the legislation in finance bill 2022 or 2023.
The measures would apply to no-tax jurisdictions and jurisdictions included in the EU’s “black list” of non-cooperative jurisdictions for tax purposes.
The consultation asks about criteria for identifying payors and recipients to which the measures would apply, any potential issues in applying the measures with respect to tax treaty partners, and any necessary amendments with respect to the operation of dividend withholding tax.
Separately with respect to outbound payments of interest and royalties, the consultation asks whether denying a deduction or imposing withholding would be more effective. With respect to the preferred approach, it further asks what the advantages of that approach would be and how the measures should be designed.
The consultation also seeks feedback on whether the implementation of such measures would enable simplifying or eliminating any existing anti-avoidance rules.
The government states that it anticipates that many of the issues related to outbound payments have been remedied by recent Irish, US, and international tax reforms. In this respect, it cites research showing that outbound payments from US multinationals within Ireland are increasingly going directly to the US, where they are taxed, rather than to offshore financial centers.
Nonetheless, the consultation seeks information on what additional measures are still needed to prevent double non-taxation relating to outbound payments.
Comments will be accepted until December 20.
Doug Connolly
Doug Connolly is Editor-in-Chief of MNE Tax. He has more than 10 years of experience covering tax legal developments, previously working with both a Big Four firm and a leading legal publisher. He holds a law degree from American University Washington College of Law.
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