Ms Cora O'Brien:

Deputy Doherty referred to the possibility of increasing corporation tax income if we were to move to an incorporation test if companies did nothing. The problem is that companies could do something. That is the real issue here. We are trying to strike a balance between our good reputation and good citizenship, on the one hand, and our competitive regime, on the other. The reason the BEPS process is multilateral in nature is that the issue is not about one country or company but about moving together. If countries move together, the process will have a much better chance of succeeding. Changing the rules internationally to the extent that there are mismatches has a much better chance of resolving such mismatches. The position is that, on the one hand, behind the scenes one has as a motivating factor a US tax policy that effectively allows for deferral of non-US income and, on the other hand, a BEPS project on which consensus has not yet been reached and which awaits full roll-out. If, in such circumstances, one decides to act unilaterally before either of these processes has been concluded, the question will be what will companies do. That is the great unknown.

There are mechanisms and offerings in so many other countries that if we take some action here and nobody else moves, companies may reorganise their structures and move elsewhere. The problem is that once one loses part of one's pipeline, it is very difficult to get it back. The ongoing consultation process is extremely important for this reason. For this reason, we and others need to contribute to process to ensure we have a proper, grown-up discussion on deciding where one draws a line between rate and reputation and the potential consequences. We also need to discuss how we can set ourselves up positively.

One of the great aspects of our corporation tax system is that the 12.5% rate is only available to companies that have substance. A company cannot avail of the 12.5% rate on trading income if it does not have substance. That is a condition of the rate. Pascal Saint-Amans has clearly stated that Ireland, with its broad, substance-based system, is well set to make the most of a world post-BEPS in which some of the current mismatches have been resolved.