Ireland's famous tax loophole used by multinational corporations like Google will be slowly phased out, the government announced Tuesday.
According to The Wall Street Journal, the law will close the so-called "Double Irish" by requiring all companies registered in the country to be tax residents in the next six years.
"I want to make sure that the slur of the "Double Irish" is no longer attached to Ireland's reputation and it had become something that was thrown at us internationally," Finance Minister Michael Noonan
told Reuters following his budget speech.
"There's a big advantage I believe for Ireland to be the first mover. Our competitor countries, if you were investing there tomorrow you would still be uncertain about what the regime might be in two years' time."
Heather Self, a tax expert with Pinsent Masons LLP in London, summed it up thus: "The supertanker is turning. We are moving toward some tax being paid somewhere on all income."
The tax loophole has been favored by sectors like technology (e.g. Facebook, LinkedIn, Microsoft, VMware) and pharmaceuticals, and it's estimated that tens of billions of dollars are funneled through the Irish tax haven each year. Slowly closing that loophole will create a significant new revenue boost for Ireland.
At the same time, however, Noonan said Ireland will remain competitive for businesses — keeping its low 12.5-percent corporate tax rate intact.
The new rule will go into effect in January, but companies have until 2020 to come into compliance.
"As we've always said, it's for governments to decide the law and for companies to comply with it. We're deeply committed to Ireland and will work to implement these changes as they become law," Google said in a statement responding to the rule change.
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