Tax justice and the potential role of Ireland’s tax practices in facilitating the shift of wealth from the Global South by companies is the focus of the latest report from ActionAid Ireland: Mistreated.
The report details how tax treaties are “depriving the world poorest countries of vital resources”, in particular by presenting a risk to the collection of tax revenue and allowing companies to take advantages of restrictions that may be imposed under tax treaties. While welcoming some progress by Ireland, the report finds that many of Ireland’s tax treaties are “very restrictive” in terms of taxing rights for the source country and more favorable terms could have been based on the UN model tax treaty. ActionAid sees Ireland’s tax policies as being out of step with declared development objectives, including human rights. The report recommends a “pro-development approach” to tax treaties by Ireland adopting the UN Model Double Taxation Convention between Developed and Developing Countries. The following recommendations are also made:
- Include strong and effective anti-abuse clauses in all double taxation treaties.
- Introduce greater transparency by subjecting treaty negotiation, ratification and impact assessments to far greater public scrutiny:
- Draft versions of tax treaties should be subject to public scrutiny prior to signature.
- Draft tax treaties should be subject to parliamentary scrutiny in the Oireachtas in advance of signature.
- Expected impacts should be published before signing a treaty. An analysis of whether those impacts have been achieved should be published every five years thereafter.
- Review tax treaties across government departments to ensure objectives and potential impacts are in line with One World, One Future and Ireland’s policy coherence for development framework.
- Introduce greater transparency through public Country by Country Reporting.
The report is a valuable contribution to ongoing efforts to ensure Ireland’s tax practices do not undermine development and human rights in other countries and is well worth a read by those with an interest in this issue.