TaxAdministrationDublin’s gain is Darling’s loss

Dublin's gain is Darling's loss

As large corporates move to the Irish capital, Darling feels the heat

Dublin

Rules of attraction: Ireland’s tax rules benefit Dublin

For years, Gordon Brown was told that companies would leave the UK in protest
at his tax policies when he was chancellor. Alistair Darling, his unfortunate
successor, is now reaping the whirlwind.

The move will be worrying not just politicians but the profession as a whole.
If headquarters depart, so do support services and the jobs associated with
them.

Although Shire Pharmaceuticals stressed its UK head office would stay put
with its board whisked up to Dublin for important decisions, it doesn’t bode
well for the future of head offices in this country.

Chris Morgan, international tax head of KPMG, said: ‘Over time it is
inevitable that these migrations will lead to loss of jobs. The problem with
multi-nationals operating globally is they will not choose to do their business
in a place which is more expensive than another one. When this happens you start
to erode the reason for them to have a base in the UK.’

Bill Dodwell, head of tax policy at Deloitte, points to the fact that
companies are no longer choosing the UK as their base when they want to expand
internationally.

‘We haven’t seen anyone come to the UK for some time. With global mergers the
parent company of choice used to be the UK but not anymore,’ he adds.

But tax campaigner Richard Murphy says you can’t blame the government for
tightening up the regime on foreign profits. He believes companies which move to
Ireland will be under intense HMRC scrutiny over transfer pricing.

‘In practice it will mean we will have to co-operate more fully with the EU,’
he says.

This could lead to the UK being more receptive to the EU’s common
consolidated corporate tax base proposals, where total profits would be
appropriated to different member states according to the level of work force,
assets and capital there.

‘This is one way of the government addressing the problem of corporate
mobility. It’s a potential solution but the political ramifications are huge,’
says Morgan.

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