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April 30, 2015

CPA Ireland head slams Irish tax system as “unfair”

Newly elected Certified Public Accountants in Ireland (CPA Ireland) president Brian Purcell has criticised Ireland’s tax system as "unfair", saying it is turning home-grown entrepreneurs towards the UK.

Purcell, who is a partner at Purcell McQuillan Tax Partners, called for the country’s tax system to be changed to render it more competitive compared to that of countries such as the UK, incentivising Irish business-starters to stay in the country.

In particular, he called for changes to what he described as a punitively high capital gains tax on entrepreneurs.

"In Ireland, you have the absurd situation where the greater the value an entrepreneur adds to a business the more they will owe the government in tax when they eventually come to sell it or pass it on to the next generation," he said.

"This prompts them to sell the business sooner rather than later and well before it has an opportunity to realise its full potential in terms of international scale or employment generation."

Purcell’s comments follow a general shift in the Irish government away from tax competition, in the wake of ongoing public backlash against both businesses appearing to avoid tax and countries seemingly enabling them to do so.

In November last year, Ireland Minister of Finance Michael Noonan announced the scrapping of the country’s controversial double Irish scheme.

The scheme, which allowed foreign businesses to establish an operating firm in Ireland and subsequently move the majority of their taxable income to Irish-registered firms in foreign tax havens, had come under fire by the international community and the EU in particular.

However, Purcell said unfavourable tax legislation not only hampered Ireland’s international competitiveness, but also impact Ireland’s ability to retain talent and unfairly discriminates against the self-employed.

Comparing Ireland’s tax environment to the UK’s, Purcell particularly praised the entrepreneur’s relief scheme which allows businesses to only pay 10% capital gains tax on the first £10m of profit derived from the disposal of a business.

"The Irish government needs to follow suit," he said. "It is an intolerable situation where Irish entrepreneurs have to pay more than three times as much tax as their UK counterparts. That’s certainly not a sign of a great country in which to start up and grow a business."

 

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