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

This has been an interesting debate, but we are probably not much further along on the question of defining an effective rate of tax. In the case of Apple, one of the major multinationals with operations in this country which we want to keep here, its chief executive officer gave written evidence to the United States Senate hearings that its effective tax rate was calculated by the Irish authorities at 2%. He gave this evidence voluntarily to a committee that was examining tax rates. He put these words on paper, although, after being contacted by the Department, he withdrew the claim. It is the age old issue of a particular company using one method to calculate its effective tax rate and the Department using another. There seems to be little prospect at this time of figuring out a universal way of doing it that would be acceptable to all parties.

We ran out of time earlier before Professor Stewart could answer my question about the BEPS process, which will push us and every other jurisdiction in a certain direction. His view seems to be that where firms are incorporated is where they will pay tax. I understand the United States is the only jurisdiction in which that arrangement currently applies; therefore, it will be a radical shift. If we are going to be manoeuvred down a certain path in agreeing collectively to this at a global level, how do we stay ahead of the curve? It is not just about what the BEPS decides. Professor Stewart is saying we should focus on industrial policy, with which I am in complete agreement. There is a concern, however, about the fragility of our tax base and our reliance on some €4.2 billion in corporation tax which could be taken away from us through the BEPS process, albeit there is a possibility that it could be enhanced. Even if the BEPS does not take us down the road of incorporation, we could choose to change our own tax law if we so wished, with all of the risks that would entail. If the position is that a firm is incorporated here if it is tax resident, there will be a consequence. As we have discussed, the US companies in question are bringing in some $100 billion and paying an effective tax rate of 2.2%. If they were all tax resident, as a result of being incorporated here, the entirety of their earnings would be taxable here. In that context, we could apply an effective tax rate across all companies - that is, every single company registered in Ireland - of, say, 4%, and still take in more in corporation tax than we currently are. In other words, we would be better off.