The European Commission will put pressure on Ireland to impose a tax on the recovery fund scheme. This will put pressure on Ireland to counter “aggressive tax planning” on national plans to spend $ 750 billion on Covid-19 financial recovery funds from sanctions.

A complicated situation

Ireland is expected to receive billions of euros in grants and loans over the next three years as part of the stimulus package, but a plan needs to be devised on how to spend the money the commission has to approve.

For recognition, member states must be committed to investing in investments that will strengthen their economies in the future, especially in digitization and green initiatives.

The Commission will also insist that governments agree to implement a list of long-term reforms known as “country-specific recommendations” for signing cost plans and disbursements.

According to a commission document, this includes “closing loopholes in their tax codes, modernizing / digitizing tax governance, and promoting a culture of obedience.”

Gentiloni’s opinion

European Economic Commissioner Paulo Gentiloni has confirmed that tax reforms on the Irish National Recovery Plan are on the Commission’s wish list, in a written response to Sinn Fൻin MEP Chris McManus, seen by the Irish Times.

“It is important to strengthen the fight against tax evasion and to close loopholes that could lead to double tax evasion,” Gentiloni wrote. “In the Irish context, the product indicates that tax laws are used by companies engaged in aggressive tax planning as a percentage of the gross domestic product with high domestic royalties and dividends.

Significant progress

It is hoped that the Recovery and Reconstruction Programs of Member States will effectively address all or a significant part of the challenges identified in the relevant country-specific recommendations, including the financial aspects, ”he added.

Unless the Commission considers progress with these recommendations to be ‘significant progress’ or ‘full implementation’, all country-specific recommendations are relevant.

The European Commission has come under increasing pressure from more economically conservative member states to strictly control the way funds are spent on recovery, and has promised to use “stricter standards”.

In its recommendations for Ireland in 2020, the Commission wrote that the payments of certain shareholders, which are high as a percentage of GDP, indicated that companies were using Irish tax laws for aggressive tax planning.

He argued that “addressing this issue is the key to improving the efficiency and fairness of tax systems” and that broadening the tax base would “make Ireland’s public finances more resistant to economic fluctuations and irrational impacts”.

In the initial drafts of the EU member states’ national spending plans, the problem of aggressive tax planning is “not solved”, according to a commission document, which states that the measures already taken “will only be partially solved”.

International moment

In a keynote address last week, Prime Minister Pascal Donohue justified Ireland’s tax record, saying the country is committed to leapfrogging tax transparency and reform.

Donoho acknowledged that there is an international pace to reach international agreements on digital taxes and minimum corporate tax rates. But he argued that Ireland’s 12.5% ​​tax rate was reasonable. He said monetary policy was essential to help smaller countries compete. The benefit they enjoy. From big countries “.

The initial deadline for submitting national spending plans was Friday, but Ireland, along with other member states, has received an extension and is expected to send a 1,000-page document in May. The commission expects to receive about a dozen national projects by this weekend.

An important part of the EU recovery plan is that Ireland is one of the EU countries that has not yet been approved, allowing the Commission to borrow for fundraising, which requires the approval of national parliaments.

Location of the rest of Europe

Germany, France, Italy and Spain have jointly called on the national parliaments to sign the plan so that money can start flowing to stimulate the epidemic-affected economy. Finance Minister and Spanish Deputy Prime Minister Nadia Calvio said: “Time is of the essence.

The situation as a whole is handled to provide real knowledge of what Europe is experiencing. What we need to do is to have a deeper understanding of what each state should take, especially with regard to Ireland.