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MFA Submits Comments on U.S. – Ireland Tax Treaty

On October 14, MFA submitted a comment letter to the Irish Department of Finance in response to its request for comment on the renegotiation of the U.S. – Ireland tax treaty.  In our letter, we encouraged the government to ensure that the treaty provides a framework that promotes cross-border investment and capital flows by providing investors in investment funds with similar tax treatment to what they would receive if they invested directly in capital markets, instead of through a pooled investment vehicle.  We further noted that provisions in the current treaty regarding residency and ownership requirements are important for investment funds to qualify for treaty benefits and, we believe, are consistent with the policy goals underlying the tax treaty between the two countries and we encouraged the government to consider maintaining those provisions accordingly.  To the extent the Irish and U.S. government decide to amend the treaty’s approach to determining which investment funds would be entitled to treaty benefits, we encouraged the government to consider a proportional benefit approach, similar to MFA’s suggestions in response to the OECD’s Action 6 on limitations on treaty benefits, part of its Base Erosion and Profit Shifting project, noting that this proportional benefits approach would achieve the policy goal of tax neutrality for investors while addressing policy concerns about treaty abuse.