Mr. Pascal Saint-Amans:

I thank Deputy McGrath for this question and for giving me the opportunity to clarify something which may have been misperceived. What I tried to say when I was in Ireland a few weeks ago was that what the world is currently concerned with – I understand there is consensus on that concern – which is that we have moved from the elimination of double taxation to the facilitation of double non-taxation. We have been very clear in the OECD that it is not any country’s fault, nor is it the fault of the business; it is just a matter of fact or of law where one has some discrepancies or loopholes in the law. When I refer to law I am referring to the articulation between domestic tax rules and international tax rules as they have developed based on the model tax convention and the interpretation of transfer pricing. In other words, instead of having companies paying their corporate income tax at the rate which is paid in the country, the play on the different domestic rules, international rules and the gaps between tax sovereignties have resulted in lowering quite dramatically the effective tax rate of a number of companies. In general those companies are the internationally exposed companies - in other words, multinationals.

What I was trying to say is that 12.5% is not a problem. In the international environment, as is, there is consensus on the fact that it belongs to fair tax competition but there is concern when the articulation of the different rules will result in an effective tax rate which is dramatically different from the secondary tax rate in Ireland as in any other country. What is being attempted is to precisely make sure that we reconcile the location of the profits and the location of the real business so that we can reconcile the statutory tax rate with what companies are paying or there will always be a legislative gap between the effective tax rate and the secondary tax rate, which is not legitimate. What is no longer considered acceptable is that the gap would be justified by the inadequacy of international tax rules on how business currently operates. I hope that clarifies my previous statements.