The President of the Irish Tax Institute says that Ireland must “prepare for the worst” as the threat of a global tax and trade war increases following the election of Donald Trump as US president.

Speaking at the Institute’s Annual Dinner on Friday 28 February, Aoife Lavan said that any hope that the OECD’s global tax agreement would bring stability to international tax rules was dashed when US President Trump effectively “tore up the hard-won OECD reform process”, with potentially serious implications for Ireland. “Despite all our efforts over the last decade, tax certainty remains as elusive as ever.”

Ms Lavan called on the Government to act speedily on factors it can control, such as the increased delivery of housing supply and top-class public infrastructure, as well as addressing the costs of doing business. In particular, she notes the importance of a simplified domestic tax system.

“A clear, simple and easy to comply with tax system would be a major competitive advantage for Ireland, as it seeks to attract foreign investment in the current uncertain environment.”

She said that the Government needs to “create a sense of urgency” around the delivery of commitments to review and simplify current SME tax measures. “The Institute has recently called out the overly defensive approach to the legislative design of SME tax measures. We believe this approach has hindered the pro-enterprise policies of successive governments. The policy intention of SME tax measures is to enable growth, yet the reality is, these measures can be a minefield for businesses.”

She advised that the risk business owners take in setting up a business needs to be acknowledged and that they should be supported.

“In our view, that requires a shift to a more supportive mindset across Government . . . risk is an integral part of any enterprise and those who take it should be supported and are entitled to a fair reward.”

A pensions expert, Ms Lavan welcomed the pending introduction of the auto-enrolment scheme but argued that it must be made as attractive and flexible as other pension structures. For example, access to auto-enrolment benefits is currently restricted to those aged 66, whereas other schemes offer earlier access. She added that the self-employed should have the option of joining the auto-enrolment scheme.

“The self-employed are already at a disadvantage when it comes to pension coverage, the lack of flexibility on contributions takes no account of the fluctuations they typically experience in their income, particularly as they approach retirement age.”

Ms Lavan added that recent rule changes had added complexity to PRSA schemes: “We urgently need clarity for pension administrators and employers on the operation of the new PRSA rules and look forward to continuing discussions through TALC on this issue.”