Brian Hayes (Dublin South West, Fine Gael) | Oireachtas source

It is good to be before the committee. On the first issue, there are three draft Government orders giving force of law in Ireland to new double taxation agreements with Egypt, Qatar and Uzbekistan. These are a draft order to update the double taxation agreement with Switzerland, a draft Government order giving force of law to a tax information exchange agreement with San Marino, and a draft order to give effect to a Council of Europe OECD convention on mutual assistance and tax matters.

Double taxation agreements are widely regarded as crucial items of fiscal infrastructure for developing substantial bilateral trade and investment opportunities by reducing the tax impediments that might otherwise did deter such cross-border activity. For a small, open economy like ours, so dependent on trade and investment with other countries, continuing to expand our network of international tax agreements is not only necessary but vital. Double taxation agreements facilitate trade and investment by providing greater certainty to taxpayers regarding their potential liability to tax in foreign jurisdictions, by allocating taxing rights between two jurisdictions so that taxpayers are not subject to double taxation, by reducing the risk of excessive taxation that may arise because of high withholding taxes, and by ensuring taxpayers are not subject to discriminatory taxation in the foreign jurisdiction. Double taxation agreements provide benefits to taxpayers and governments by setting out clear rules that will govern tax matters in respect of cross-border trade and investment. Tax treaties ensure predictability and fairness in the tax treatment of taxpayers and spell out clearly defined provisions that facilitate companies investing in doing business overseas.

This is achieved by allocating exclusive taxing rights to one country, or where both countries retain taxing rights, by requiring the country where the taxpayer is resident to grant credit against its tax for the tax paid in the other country.

Double taxation agreements cover direct taxes, which in the case of Ireland are income tax, corporation tax and capital gains tax. They are comprehensive in scope, covering both the taxation of companies and individuals, and are in the main based on the OECD model of tax convention. Apart from relieving double taxation, double taxation agreements also include provisions dealing with non-discrimination in relation to taxation matters. They also have mutual agreement procedures, which allow the tax authorities of both countries to consult with each other in taxation matters affecting the agreement, and provisions that allow for the exchange of information for the purpose of preventing tax evasion.

Ireland's tax treaty network compares very favourably with the networks of other larger OECD countries and now includes most of the world's major economies, accounting in aggregate for more than 80% of world GDP. The Irish treaty network has grown by almost 50% in the past three years. Through the remarkable work by our officials in the Departments of Foreign Affairs and Trade and Finance and the Revenue Commissioners there has been very impressive growth in treaties in the past three years. We are a small country with finite resources and to conclude that number of treaties in three years is astonishing. We have now signed comprehensive double taxation agreements with 68 countries, of which 61 are in effect. Negotiations for new agreements with Egypt, Thailand, Ukraine and Uzbekistan have concluded and should be signed shortly. Negotiations for new agreements with Azerbaijan, Jordan, Qatar and Tunisia are at various stages. Negotiations for a revised treaty with the Netherlands will begin next week.

The Minister for Finance and I will ensure that we continue to prioritise the further expansion of our tax treaty network over the coming months as a central element of our integrated strategy for an export-led sustainable economic recovery for Ireland. I assure Members that the Department of Finance and the Revenue Commissioners will continue to liaise with business representative bodies in identifying other countries where tax agreements would assist Irish business. Of course, despite our best efforts there are some key jurisdictions that we have yet to secure and we will continue all diplomatic efforts to get these countries to the negotiating table.

I will now turn to the tax information exchange agreements. These agreements, while serving a different purpose, are also important international agreements which strengthen the ability of revenue authorities in both countries to enforce their tax laws and thereby encourage the development of closer economic relations between both countries in the future. We have now concluded tax information exchange agreements with 19 jurisdictions. All of these are based on the OECD model TIEA. The model TIEA grew out of the work undertaken by the OECD to address harmful tax practices globally.

The OECD model TIEA now represents the international standard for effective exchange of information in tax matters. There has been a significant acceleration of the process of signing TIEAs between OECD countries and offshore jurisdictions in the past couple of years mainly stemming from a threat by the G20 to blacklist jurisdictions that do not conclude at least 12 information exchange agreements. The TIEAs will allow the Revenue Commissioners to directly request from foreign tax authorities information that is relevant to an Irish tax investigation, such as bank account information or company or trust ownership information. It is, therefore, crucial that these agreements are in place to make sure the two way flow of information is in place, particularly when it comes to an individual on the Irish side's tax liability. The agreements will greatly assist the Irish Revenue Commissioners in tax investigations involving entities and bank accounts located in these jurisdictions.

The final draft order today relates to the Council of Europe/OECD Convention on Mutual Administrative Assistance in Tax Matters. The other agreements we are discussing today are bilateral agreements between this country and other jurisdictions, whereas this convention is a multilateral agreement between all parties to the convention. Ratification of this convention will assist in the prevention and detection of evasion relating to Irish taxes. It will enable the Office of the Revenue Commissioners to request information on persons located in the territories of other parties to the convention and this will assist them in determining whether those persons have a liability to Irish tax. It will enable Revenue request other parties to the convention to collect Irish tax. It will enable Revenue request other parties to the convention to serve documents on their behalf. The convention offers more flexibility than a bilateral agreement such as a double taxation agreement as it is a multilateral instrument.

Today's consideration of these international agreements by the committee is an important step in their ratification process. Draft Government orders confirming and giving effect in Ireland to the agreements were laid before Dáil Éireann on 10 December 2012 in accordance with the provisions of section 826 of the Taxes Consolidation Act 1997. A resolution by Dáil Éireann approving the draft orders is required before the Government can make the orders. The proposal that Dáil Éireann approve the draft orders has been referred to this committee for consideration. After consideration by the committee, the draft orders are then referred back to the Dáil for approval. After that the Government may make the orders and the agreements will then be included in a Schedule to the Taxes Acts by means of a section in the forthcoming Finance Bill. Thereupon, the Irish ratification procedures are completed. In the case of the bilateral agreements, as soon as both countries have completed their procedures, the agreements will take effect in accordance with their entry into force provisions.

I commend these draft orders to the committee and if required I will be happy to deal with any questions from Members.