Recent Irish tax news has us thinking of the early years.
Time is running out! That was the call to treasurers back in 1994 when Ireland was setting itself up as a tax haven. Specifically, the clock was ticking for companies considering establishing low-tax finance or treasury operations in Dublin. At the time of the story (May 30, 1994, below), companies had until the end of the year to get approval from the Irish Ministry of Finance to set up shop in the International Financial Services Center at the Dublin Docks.
As it turned out, Irish eyes were smiling on the scrambling companies, as the deadline was extended another five years to 2000. Similar largesse is now happening again more recently after Ireland, responding to critics of its policy, agreed to end its “Double Irish” tax policy. This policy allowed MNCs to form aggressive tax structures so as to pay little or no taxes. After the end of the Double Irish, all Irish-registered MNCs will be required to be tax residents of the country within the next six years. But, there’s a loop hole. According to the Wall Street Journal, embedded within the legislation to eliminate the Double Irish, “is a separate provision that would allow companies to pay no corporate tax on profits earned from patents, licenses and other intellectual property.”
“The expanded tax provision proposed in the Irish budget would give companies an incentive to make Ireland the home for their intellectual property—some of it now tied up in Double Irish structures—as well as give them a simpler means to shield some of the same income from taxes,” the Wall Street Journal said.
The proverbial God closing a door and opening a window. But there’s powerful incentive to keep that window open. Since 1994, the country has attracted more than 700 US companies, creating 130,000 direct and 100,000 indirect jobs for the country, according to the Irish Times. With those numbers, the eyes will keep smiling.