Professor Jim Stewart:

There is no doubt that there has been considerable publicity relating to Ireland, but it is based on fact. It is based on the fact that if one looks at the accounts of some US multinational companies, two jurisdictions are identified - the United States of America and Ireland. The tax these companies pay in the United States is shown, as is the tax they pay outside it. One can see that even though most of their sales occur outside the United States, a tiny fraction of the tax is paid outside it. A lot of countries, for which I have some sympathy, are not happy with this state of affairs. They do not like the arrangement whereby companies can operate in a country and not pay any tax whatsoever. This is particularly the case in the digital economy and it has become a serious problem in that context. Part of the issue is actually determining where companies are located, where their sales take place and so forth. The growth of the digital economy has made it possible for some companies in the corporate sector to avoid paying both corporation tax and value added tax, but, as we all know, countries need to raise tax revenue.
There are also issues of unfair tax advantages at play. To give the Deputy an example, he can buy a book from a certain company which appears to be coming from Luxembourg where VAT rates are very low. In fact, we know that the book is being shipped from a warehouse in the United Kingdom. This particular bookseller has an unfair tax advantage vis-à-visother booksellers. That is why the European Union is examining the issue. It is examining our tax regime in the context of tax competition. It is looking for evidence of unfair tax competition which gives an advantage to some firms, corporate entities and even some economies over others.