The Irish government says it wants to put a “tough” stamp on multinational companies.
But how tough?
It wants to introduce the first legislative change in the country’s history that would put a maximum fine of €3m on companies who don’t comply with laws.
In a report to the government, the Law Office of the President of the Republic, the office of the Attorney General and the Office of Justice Minister said the measures are needed to “deter and deter” companies.
It’s a policy that has been put forward by a committee chaired by former Fine Gael minister John Hayes and backed by business leaders and the EU.
It is a tough line that the Government is aiming to take as it seeks to ensure Ireland is a “high-quality” place for companies to set up and operate.
But will it succeed?
The committee was not a panel of academics or lawyers.
It was made up of a range of people including members of the public, who were invited to give feedback.
There were calls for the proposals to be introduced by a deadline and for the government to publish its position.
The law office said it would have no comment on the proposals until they were published.
What we do know is that the proposals would make it a criminal offence to fail to comply with Irish corporate law, and that the maximum fine for companies found guilty of this offence would be €3 million.
This means that companies that have been found guilty would be fined an annual sum of €8.7m, which is equal to around €30,000 per person.
The maximum penalty is meant to deter companies from making decisions that may cause the detriment of the country or the economy, as opposed to just failing to comply.
What does the proposal do?
The proposal would require companies found to be non-compliant to apply to the Irish Corporate Authority (ICA) for permission to operate in the Irish market, which would then be reviewed by the ICA.
If the company fails to comply, it would be subject to fines of €2 million, which in practice would amount to €3.4 million.
The proposal does not require companies to register with the IAC, but it does stipulate that any company that fails to register would be liable for a maximum of €1 million in fines.
The proposed penalties for non-compliance are much higher than those imposed on other multinationals.
What are the critics?
The law office also said it does not expect the proposed penalties to be a huge deterrent to companies, who could instead be “grudgingly obliged” to comply in the interests of their employees and employees’ rights.
But there is also concern that the measures will encourage the formation of companies that are “more inclined to make mistakes, to make bad decisions and to make decisions that can cause harm and harm to others”.
This is because, the law office argued, companies will be encouraged to make these mistakes if they are less likely to pay fines if they do not pay them.
This is the case because companies that do not register with ICA will be subject for an “administrative penalty” of €30 million, up to a maximum penalty of €4 million, whichever is greater.
The law of the land, of course, is that you cannot make bad choices if you are not paying your taxes, but what is not clear is how this would be enforced.
What is clear is that if a company is found to have violated the law of a particular jurisdiction, it will be held responsible for the cost of its compliance, which will not be paid.
In this sense, the proposal is “very similar to other laws that are currently on the books in the EU”, the law firm argued.
But some people are worried that companies will simply use the €3-million penalty as a “slush fund” to cover up their losses.
This could mean that they don’t pay the fine, instead paying the administrative penalty, which could then trigger a penalty of around €60 million for a company.
That is “totally unacceptable”, the Law of the Land said.
The Government should therefore introduce a statutory instrument to ensure that companies pay their administrative penalties in full.
What can be done?
The Law Office also said that companies could apply to set aside up to €1.5m to be allocated to the IFA for every year of non-cooperation.
This would be paid out to the company on a quarterly basis and would not be subject, however, to a statutory ceiling of €5.5 million.
The government has also promised to increase the number of people employed by the EU to 200,000 people.
What are the consequences for businesses?
Companies are already paying €4.2bn a year in corporate tax, according to the latest estimates of the Office for National Statistics.
The Government has said that this will be sufficient to keep up with the changing nature of businesses and the need to ensure a competitive,