Monday 5th. October 2015
New corporation tax plan could yield a bigger take for Ireland
OECD director says double-Irish is over but that does not mean Ireland will lose business
Pascal Saint-Amans, director of the Centre for Tax Policy and Administration at the Organisation for Economic Co-operation and Development.
The new global template for taxing multinationals could lead to more corporation tax being collected by Ireland, according to the head of the team behind the new plan.
Pascal Saint-Amans, director of the Centre for Tax Policy and Administration at the Organisation for Economic Co-operation and Development, was speaking as the OECD said that up to $240 billion (€213 billion) is being lost annually to exchequers around the world because of aggressive tax planning by multinationals.
The final report of the OECD’s Base Erosion and Profit Shifting (Beps) project has been published in Paris and looks set to be approved by the G20 heads of state later this year.
“This document sends out an extremely strong message to tax planners,” Mr Saint Amans toldThe Irish Times. “The process is now moving on to the implementation phase.”
He described the report as the “soft law” for global business taxation for the coming decades. The plan is the biggest development in global tax rules in a century.
From the point of view of Ireland’s interests, Mr Saint Amans said, the fact that the Beps plan seeks to create stronger links between where a multinational has its business substance, and where its profits are taxed, means that it should not be seen as a threat to Ireland’s crucial foreign direct investment sector.
A number of major multinationals, such as Microsoft, Facebook and Google, have substantial operations here that book their turnover from across Europe and further afield. However much of the related profits are booked in offshore locations such as Bermuda and the Cayman Islands. The Government has said it is to close down this structure, the so-called “double Irish”, by 2020, in part in response to the global controversy about restoring fairness to global tax planning.
The double-Irish is over, Mr Saint Amans said. “But that does not mean Ireland will lose business. In fact I think quite the opposite. This should increase the taxation [collected in Ireland].”
The Beps project was commissioned by the G20 and is a response to concern at the way multinationals have been able to use mismatches between national laws and other aspects of the global tax system, to create aggressive tax planning structures.
“The stakes are high,” the final report says, with the amounts involved estimated as being “between 4 per cent and ten per cent of global corporation tax revenues, ie $100 billion to $240 billion, annually.”
The research indicates that multinational subsidiaries in low tax countries report almost twice the profits, relative to assets, of their global group, and the report is an effort to counter this.
The final report covers such areas as so-called hybrid financial products that facilitate aggressive tax strategies, treaty measures aimed at preventing double taxation that have led to double non-taxation, and the introduction of confidential country-by-country reports that will see revenue authorities get a clearer picture of how multinationals are structured.
The report is an agreed one at a technical level but some measures are more accepted than others, with the position to be taken by the Republican Party in the US among the major issues complicating the drive towards a new global regime.
While the Beps document says there is an urgent need to restore the trust of ordinary people in the tax system, many organisations campaigning for developing countries say the Beps plan does not go far enough in helping poorer countries get their fair share of tax from multinationals.
Among the forces driving the Beps process are fears that governments, in response to public concern about how little tax huge and profitable multinationals are paying, will introduce unilateral measures that will complicate the global market. Also, multinationals are becoming more and more concerned about the reputational damage they suffer by way of controversy over the amount of tax they pay.
On the other hand, the world’s largest economies want to ensure that the redrawing of the global rules on the taxation of multinationals, does not run contrary to their interests.
Peter Reilly, the Beps Policy Leader with PwC in Ireland, said the report has been produced within a tight timeframe and while it did not achieve all it set out to achieve, “it is still the biggest change in one hundred years in the area of international taxation.”
On balance, he said, he believed the report was positive from the perspective of “Ireland Inc”.
However, he said Ireland will need to ensure the Beps plan does not create disadvantages for smaller economies, especially by way of changes to the international tax treaty network.
Squeezed middle to pay less than 50% tax for first time in six years
This week, a series of key meetings will take place between Mr Noonan and Public Expenditure Minister Brendan Howlin and their Cabinet colleagues
Middle-income earners will pay less than 50pc tax on their salaries for the first time in six years, the Irish Independent can reveal.
With just over a week to go to the last Budget before the General Election, the Government will lower the effective higher rate of tax to at least 49.5%, several senior sources confirmed last night.
Those sources also said there was a “strong desire” to reduce the tax burden on middle-income earners to as low as 49%, if this proves achievable.
“The desire is there, it is now just seeing what is achievable in the final shake-up of the numbers,” one senior source said last night.
Finance officials have concluded the bulk of their work on the Budget, with the discussions now “firmly in the political realm”. The deeply unpopular Universal Social Charge is set to be the focus.
While the Budget is not yet finalised, there is a strong desire within both Fine Gael and Labour to deliver a 2% tax cut, should the numbers allow it.
“We would love to do it, but certainly at this stage we are looking at a 1.5% cut,” said one well-informed Government source.
Were the Government to achieve a 2pc reduction through cuts in the USC, those earning €70,000 would be more than €1,000 better off, those on €50,000 would be €650 better off and those on €35,000 would be €350 better off.
This week, a series of key meetings will take place between Mr Noonan and Public Expenditure Minister Brendan Howlin and their Cabinet colleagues.
Once those face-to-face meetings are concluded, Mr Noonan and Mr Howlin will bring a draft Budget document to the Economic Management Council, on which they sit with Taoiseach Enda Kenny and Tánaiste Joan Burton.
The overwhelming focus of the tax cuts is on the penal burden of the USC, particularly for those earning €70,000 or less.
Mr Noonan is looking at a cut to the 7pc rate and examining raising the entry point at which people start paying the USC.
“The net effect when both measures are combined will be 2pc,” said a senior Government source.
Coalition sources have confirmed that the USC cut will be used as their ‘big bang’ give-away to workers.
It is understood that the entry point at which people begin paying the current 7% rate will be raised to bring more than 500,000 people out of the USC net. But it is also known that the 7% rate will be reduced by up to 1.5%.
Mr Noonan is also believed to be looking at reducing the gap between self-employed people and PAYE workers on incomes above €100,000.
Meanwhile, Lucinda Creighton’s Renua is proposing to introduce a levy on all public-sector pensions over €60,000 to claw back some of the pensions paid to former Taoisigh Brian Cowen and Bertie Ahern and former top officials, some of whom have pensions in excess of €100,000.
“When they imposed a levy on private pensions during the financial crisis, they defined the limit as being €60,000 per annum,” the party said.
“Renua Ireland believes that no public servant should be in receipt of a gross pension exceeding this sum.”
Noonan says customers need to ‘shop around’ for good mortgage rate deals
Finance Minister Michael Noonan says homeowners on variable-rate mortgages need to ‘shop around’ to get the best deals on offer.
Finance Minister Michael Noonan says homeowners on variable-rate mortgages need to “shop around” to get the best deals on offer.
The minister is ruling out direct intervention to force banks to cut their rates on the basis that it would damage the choice available to homeowners.
Last week, Belgian-owned bank KBC announced it would cut its variable mortgage rate for new and existing customers.
In an interview with the Irish Independent, Mr Noonan insisted that there was better value to be obtained.
“People should shop around. I don’t understand the reluctance of people to change lenders or to go for fixed rate for a year or two because there are real gains to be made now and yet there’s a reluctance to change.”
Mr Noonan said there were dangers attached to him directly forcing banks to cut their variable interest rates.
“If you force them, what will happen is – the risk you’ll be taking – is that mortgages for new borrowers would dry up and no new mortgagees, no new financial institutions offering mortgages, would come into the market.”
The minister said his efforts to date had delivered results.
“We’ve done a lot of work on that. We’ve got them down. AIB are down. They have three movements downwards. You can get money now from AIB at 3.65pc.
“Every bank that I spoke to has made a positive offer to their lenders, which reduces the cost of their mortgage.
“The Central Bank wouldn’t agree ever that the margin was as big as is being recited by the Opposition. They are of the view that the excessive margin was somewhere around 1pc – maybe a little less. But there’s movement now.”
KBC’s reduction is the first since six banks had meetings with Mr Noonan about high mortgage charges.
AIB and its subsidiary EBS responded to previous calls for lower variable rates.
Others, such as Bank of Ireland, have reduced their fixed rates but left variable rates unchanged. Some customers of Permanent TSB, and Ulster Bank can also benefit from lower interest rates.
Credit-card size passport for European travel available today
Who can apply, how to apply, where can the card be used?
A new credit-card style passport card that can fit in wallets and purses, and which is valid for travelling to 30 European countries, is available from today.
Applications for the new passport card can be processed online or through a smartphone and tablet app, and are open to adults who already have a valid passport book.
It can be used for travelling within the European Union member states, as well as countries within the European Economic Area – Iceland, Liechtenstein and Norway.
The card costs €35 and those applying from outside Ireland will have to pay an additional €5.
“It is, in effect, a passport and it carries all the attributes and entitlements of a passport and should be treated with great care, as you would a passport,” Minister for Foreign Affairs Charlie Flanagan said at an event to launch the card this morning.
However, Department of Foreign Affairs officials said the passport card does not have to be cancelled if someone loses their passport book, and vice versa.
Mr Flanagan also said he is concerned about the current strike affecting postal services but said it is “not clear” that many passports are currently stuck in the postal system.
Passport applications can made in person in the passport offices in Dublin and Cork, as well the Irish Aid office in Limerick. Passports can be collected from the offices in Dublin and Cork.
A list of frequently asked questions has been compiled by the Department of Foreign Affairs.
Who can apply for the Irish passport card?
The Irish passport card is available only to Irish Citizens who are in possession of a valid passport book (with a minimum of 30 days validity remaining) and who are aged 18 or over.
Where can I travel on the passport card?
The card is valid for travel within the EU/EEA (European Economic Area).
Do I need a passport book before I apply for a passport card?
Yes, you must be in possession of your valid passport book in order to apply for a passport card. (Note: if your passport book is lost or stolen you must apply for a new passport book before you can apply for a passport card).
How much will the passport card cost?
The fee for a passport card is €35. There will be an additional €5 postal fee if you reside outside Ireland.
How do I pay for my passport card?
Payment can be made using a credit card or a debit card. (currently Visa, MasterCard and American Express cards are accepted).
How long is the passport card valid for?
The passport card has a maximum validity of 5 years or the remaining validity of your current passport book i.e. the passport card expiry date cannot exceed that of your passport book.
What if I lose my passport card or it is stolen?
The details of all lost or stolen passports are reported by the Passport Service to Interpol which means they are no longer valid for travel. When reapplying for your new card you should indicate the lost, theft or damage of your passport card on the relevant section of the online application form. If you are not applying for a new card you should notify the passport service by completing the contact form.
When travelling on my passport card what number do I use to check in online?
When checking in online use the card number located at the upper right hand corner on the face of the card (for example C12345678).
I have a passport photo at home, can I use it for my passport card application?
Yes, if the photo has been taken in the last six months. You can use this photo by scanning it at a high resolution (minimum 300dpi) at full size.
Sligo-based Orreco partners with IBM for Watson sports appliance
Elite sports firm will develop ‘Coach Watson’ app to help teams and players avoid injury
Irish elite sports firm Orreco is to partner with IBM on its billion-dollar super computer Watson to build an app that will help sports teams to make decisions on training and treatment for their star athlete to avoid injury and maximise performance.
The Sligo-based firm, which is backed by golfers Padraig Harrington and Graeme McDowell, will use data covering 15 years of sport and more than 1,700 elite athletes in the app, called Coach Watson. The company has developed methods to analyse blood, identifying biomarkers that can help monitor performance.
Using the data from Coach Watson, coaches and teams will be able to find detailed information on medical research, and quickly answer questions on games schedules, player sleep, nutrition data, recovery, injury and fatigue.
IBM Watson has been dubbed a computer with a human brain. It can process large amounts of data quickly, can understand questions in natural language and provide evidence-based answers.
“Orreco is committed to providing holistic solutions to athletes as quickly as possible in order to help them excel while protecting them from potential illness and injury,” said Orreco CEO Dr Brian Moore.
“Through IBM Watson’s ability to put real-time sports science in the hands of performance teams, this partnership greatly enhances the speed at which our insights can be delivered to our clients, thereby improving the power, potential and competitive edge of the whole athlete.”
Orreco was founded in 2010 by Dr Moore and Dr Andrew Hodgson, and works with sports stars from Harrington and McDowell to Premier League football team Newcastle United. It also works with Formula One teams, and NBA, NHL and Major League Baseball teams in the US.
Among its early backers are Enterprise Ireland, Harrington and McDowell, former VP of Technology at Amazon.com Tom Killalea, Pa Nolan of Fexco and former group MD of Glanbia,John Moloney, who is chairman of the board.
“In professional sport there is absolutely no shortage of data. It’s everywhere. The challenge always is in making the data collected actionable,” said Harrington. “Combining Orreco’s insights and IBM cognitive computing will make for a very powerful tool and I can see Coach Watson becoming an invaluable resource for coaches and athletes alike. “
US-based Nike Oregon Track Club Elite will be the first club to work with Orreco and Coach Watson, using the app to help devise individual training and plan for competitions and recovery.
Ancient Tsunami was nearly as tall as The Eiffel Tower,
The sudden collapse of a volcano likely triggered the monstrous tsunami more than 70,000 years ago.
Scientists think that the volcano Fogo’s eastern slope crashed into the sea, leaving behind the giant scar pictured here and triggering a mega-tsunami.
When surfers have taken on nearly 100-foot-tall waves, they’ve faced the challenge of a lifetime. But those waves are pipsqueaks compared to an ancient mega-tsunami that scientists say was almost as tall as the Eiffel Tower.
An international team of scientists has found evidence that an approximately 800-foot-tall tsunami was generated when the eastern slope of the Cape Verde islands’ Fogo volcano, off the coast of West Africa, collapsed into the sea some 73,000 years ago.
The colossal wave traveled more than 30 miles from Fogo to the nearby island of Santiago, where it pushed around huge boulders like pebbles, according to research published Friday in the journal Science Advances.
And, theoretically, such an event could happen again.
“This is something that may happen in any volcano that is tall, steep, unstable and active enough to be prone to a collapse,” Dr. Ricardo Ramalho, an adjunct scientist at Columbia University’s Lamont-Doherty Earth Observatory in Palisades, New York, and lead author of the research, told The Huffington Post in an email.
“Volcanic flank collapses and their ensuing mega-tsunamis — like the one of Fogo — are what we scientists call ‘very low frequency, very high impact events,'” he said. “Due to their very low frequency, we estimate that the probability for them to happen again is very small, but they may and will happen nevertheless.”
The wave generated by Fogo’s collapse may have swept boulders like this one up from the shoreline into Santiago Island’s highlands. Here, a researcher chisels out a sample of rock to establish the date of the tsunami wave.
The researchers found evidence for the ancient mega-tsunami when they noticed delivery truck-sized boulders of basalt and limestone sitting in Santiago Island’s highlands. The boulders were as much as 2,000 feet inland but showed signs of having originated from cliff faces below where they were discovered, suggesting they had been moved by a tsunami.
The researchers calculated the energy it would take to move the boulders in order to estimate the size of the tsunami, and they examined the surface of the boulders to determine when the bizarre boulders were deposited on Santiago Island.
“First, they all came out about the same age, indicating that they all were deposited as part of the same event and secondly, the date (when they got stranded) matches the timing of the flank collapse,” Dr. Gisela Winckler, a geochemist at the Lamont-Doherty Earth Observatory and co-author of the research, wrote in an email. “When we got the dates, it became clear that we can link volcano collapse to the mega-tsunamis deposits. I was intrigued by that match.”
The researchers concluded that a mega-tsunami must have ripped the rocks from the cliff faces and pushed them up to their present location.
RICARDO RAMALHOWhen the 800-foot-tall tsunami reached Santiago Island, boulders and other debris likely were ripped from the shoreline and hurled upward hundreds of feet.
Scientists have long known that landslides coming off of volcanoes can generate tsunamis in nearby waters. But some argue that such landslides occur in stages, which would create several smaller tsunamis, rather than all at once, which would result in one gargantuan mega-tsunami as the study suggests.
“This research is important because it confirms that volcanic flank collapses may happen catastrophically and trigger massive tsunamis with devastating near-source effects,” Ramalho said. “This study reinforces the idea that we need to take this into account when we assess the hazard potential of oceanic volcanoes.”
Some scientists think more research is needed to determine the behavior of giant waves that may be generated by a volcanic collapse, as well as how to adequately monitor the chances that such a tsunami-causing collapse might happen.
“Since we’ve never seen such an event happen on an ocean island, we don’t have practical experience with how the collapse will manifest itself,” Dr. Michael Poland, a geophysicist at the U.S. Geological Survey in Vancouver, Washington, who was not involved in the study, told Nature.
Winckler agrees there is more work to be done.
“More generally, better understanding events such as the Fogo mega-tsunami is a step towards understanding how the Earth works and potential risks,” she wrote. “There is still many things we don’t understand well, for example, the mechanics and physics of the flank collapse itself.”