Michael Noonan (Limerick City, Fine Gael) | Oireachtas source

The first point to make is that the measures we are discussing will come into effect for new companies from the date of publication of the Finance Bill. In other words, these provisions already apply to new companies. For existing companies, the effective date of implementation is 1 January 2015. The reason for this is that, historically, any change to the corporation tax regime in this country has been introduced on a phased basis. For example, there was a phasing-in period when the rate went from 10% to 12.5% and when the rules regarding export sales were changed. The Deputies will know from their own contacts with those concerned that companies do not like surprises or sudden moves. They need some time to plan.

Second, there is no loss of taxes arising from this measure because the companies involved, the arrangements of which in this regard we are now eliminating, always paid tax on their earnings in Ireland. The issue was that profits made elsewhere in the world were being channelled through these stateless companies which were incorporated in Ireland. There was no advantage to the Irish Exchequer in this; the advantage was to the companies. Moreover, there was no reason they could not have engaged in the same practice in other jurisdictions. Ireland is not a tax haven, but there was a reputational advantage in having the arrangement in Ireland simply because we enjoyed a very good reputation in this area.

Deputies have asked why we have chosen to move on this issue and not the wider one. We have taken action in this matter because we can fix it in domestic legislation, whereas all of the other issues raised in the debate require international co-operation in order to address them.

Deputy Richard Boyd Barrett asked about the nature of the conversations my officials had had with representatives of the various companies. It would not be fair to the businesses in question to go into who said what and when. The summary of their position is set out in the tax strategy document that was published on budget day and which is the result of the consultation process. It represents the distilled wisdom arising from the consultation and is in the public domain.

What we are doing in this measure is very important for reputational reasons. The debate continues, of course, and we are fully participating in the discussions on the base erosion and profit transfer issues at OECD level. We hope these discussions will advance quickly. It is our view that the international corporation tax regime is not sustainable, even in the short term. Changes must take place and we are fully engaged in ensuring they do. At the same time, however, attracting foreign direct investment to one's country is a very competitive activity and there are very aggressive tax planning arrangements available in other countries. Our nearest neighbour, the United Kingdom, is becoming increasingly attractive as an investment destination precisely because of the aggression it is showing in this regard. Its patent box initiative, for instance, is subject to scrutiny by the European Commission on state aid grounds.

If it gets it, as designed, over the line, it will be offering a 10% corporation tax rate for companies which fit the requirements of the patent box. A significant number of people in Ireland are working in foreign direct investment companies. The future attractiveness of Ireland for new foreign direct investment companies or those already here that wish to expand is vital to our economic prosperity. While we want to and are willing to change, we do not want to get too far ahead of international practice either. That is because this is a very competitive area.

The OECD is moving rapidly. Its tax director, whom I met on his visit to Dublin, has laid out a programme which would involve a blueprint for action being published by September next year and action being taken shortly thereafter. He has the political support to take action now, particularly as the OECD has been mandated by the G20. The leaders of the G20 across the board are on record as stating change is required. The OECD has been vested with the responsibility of designing and implementing that change. That is the current position.