LONDON, Sept 26 (Reuters) – Brazil is carefully analysing Ireland’s request that it review last year’s decision to declare it a tax haven and is holding bilateral talks with Dublin on the issue, finance minister Henrique Meirelles said on Tuesday.
Brazil last year added Ireland, Austria, Curacao and Saint Martin to its list of tax havens, automatically subjecting transactions by companies resident in the country to stricter Brazilian tax rules.
Speaking to reporters in London, Meirelles said the government was “taking that issue seriously”.
“We are discussing that, having bilateral conversations, and analysing that issue very, very seriously. I understand there are a very important number of very large international, global funds who – because of the level of taxation – are registered there, and that indicates something,” he said.
The change, which came into effect last October, was a blow to investment funds listed in Ireland. Their Brazil-related transactions now incur a 25 percent withholding tax instead of the 15 percent they would otherwise pay on interest, royalties and capital gains.
The move also impacted other sectors. Brazilian airlines have estimated the move implied an additional 1 billion reais ($316 million) in new taxes on aircraft leasing.
Meirelles said Ireland-listed funds were clearly important investors in most countries, including Brazil.
“On the other hand, the fact that there is a special location and the fact that the taxation attracts that also means something,” said Meirelles.
“In summary – we are taking that issue seriously, let’s take the best possible decision.”
A spokesperson for Ireland’s department of finance told Irish media at the time that Dublin’s ambassador in Brazil was seeking a meeting with the tax authorities to ask for its removal from the list of tax havens.
Ireland has also faced pressure from Washington and Brussels for its pro-business tax structures, a key part of its economic policy since the 1960s and which have attracted multinationals including Google, Microsoft, Apple and Facebook.
Ireland was ordered by the European Commission to claw back 13 billion euros in back tax from Apple. Dublin is appealing the decision.