Pearse Doherty (Donegal South West, Sinn Fein) | Oireachtas source

I disagree with Professor Barry's claim that when the US introduced the check-the-box system in 1996, which came into effect in 1997, Ireland closed down its loopholes. Of course it closed down its loopholes in the Finance Act 1999, but it was not directly as a result of the check-the-box system. The paper commissioned by the Department of Finance on the loopholes that were closed down, which Professor Barry identified, with regard to Irish-registered non-resident companies was produced in 1998 but identified the flaws in the changes the Government had made to the Finance Act 1995, how they had not proved effective and how they could not be enforced, and examined how to strengthen them. It discussed how Irish-registered non-resident companies posed a threat to Ireland's international image and reputation and also mentioned cases before the courts. All of this emanated prior to 1997. It discussed the measures introduced in the 1995 Act and made recommendations which were contained in the subsequent Finance Act. The check-the-box system was introduced in 1997 and this happened in 1998, but it was a coincidence. The document makes no reference whatsoever to changes in US taxation law, and the check-the-box change, which was the subject of the US Apple hearings, facilitated companies such as Apple in doing what they do legally in both jurisdictions. The recommendation for the Finance Act 1999 proposed that registration in the State should be a test for tax residency as an alternative to the control and management test for all companies other than those ultimately under the control of a company resident in the State, the EU or another tax treaty country.

Basically this excluded companies such as Apple, Google and so forth. In my view, it did not strengthen the provisions of check-the-box. Check-the-box facilitated what Apple and other companies are doing and the Irish finance Bill remained silent on it. I have drafted legislation to deal with this issue.

A number of companies are not tax resident here because they are controlled in America, for example, Apple. One of the Apple subsidiaries makes massive profits, but there are also other such companies. They do not pay a penny in tax anywhere in the world. We could do what the Irish Government did in the 1999 Finance Act which is basically say that a company is tax resident here by virtue of the definition that it is incorporated here, if it cannot prove to the Revenue Commissioners that it is tax resident in some other jurisdiction in the world. That would immediately have an effect. Companies today can parade in the global taxation structure and say they are tax resident nowhere globally. That is what Apple did in those hearings; Apple Operations International, AOI, does not pay a penny in tax anywhere in the world on any of its profits, which were $74 billion over three years. We can close that immediately by considering the same measure that was introduced in the Finance Act 1999. Is that a measure we could introduce? I agree that BEPS will not produce a solution. What can we do to uphold our reputation and also increase our profits?