Simon Harris (Wicklow, Fine Gael) | Oireachtas source

I thank both Deputies. The diverging views on this show the importance of government getting the balance right, which is what we have tried to do. On behalf of the Minister for Finance, I must clarify that he did not mislead the Dáil on the issue. The Minister has always been very clear that the double Irish is not part of the Irish tax offering. It is just one example of the many international tax planning arrangements which have been designed and developed by tax and legal advisers to take advantage of mismatches between the tax rules in two or more countries.

The term "double Irish" refers to a structure with two Irish incorporated companies. The Irish residence rules meant that the second company, which was not tax resident in Ireland, could, nonetheless, be presented as Irish because it was incorporated here. The change the Minister is introducing in this Bill will mean that it is no longer possible for any company to use an Irish label of incorporation without also being tax resident here, unless a double taxation treaty assigns residence to the treaty country. Removing the element of the structure which gives it the double Irish name should help restore our international reputation in the context of current EU and OECD initiatives to combat aggressive tax planning.

It is not claimed that this change will bring an end to international tax planning. For that to happen - this is a point the Minister has consistently tried to make - co-ordinated action by many countries working together will be required. That is the reason Ireland will continue to engage constructively on this issue at both OECD and EU initiative levels. What we are doing here is trying to protect reputation, but also trying to take stock of our position in terms of our overall foreign direct investment offering - the three Rs, the rates, the regime and the reputation. The rate is 12.5% and is non-negotiable. We discussed earlier how the effective rate is close to the headline rate. Other countries cannot necessarily say the same. We have also talked about the regime, in terms of foreign earning deductions, SARP and the potential for the "knowledge box". On reputation, we need to ensure that when countries locate here in the context of ongoing global initiatives, they know their corporate reputation can be protected and enhanced by doing business here.

Deputy Doherty asked why there is a transitional period of six years. The transition period, which will end in 2020, is provided in order to give existing companies a reasonable timeframe to plan and reorganise their business structures. The 1 January 2015 effective date for new companies is to accommodate companies that may already have been at an advanced stage of planned investment in Ireland when the change was announced on budget day. One of the key strengths of the Government's strategy on corporation tax has always been certainty and Deputy McGrath referred to this. This certainty now applies not only to our 12.5% rate, but also to all aspects of corporate tax regime, including our rules on company residence.

I believe Ireland has seized first mover advantage, but this is an ongoing process. What other countries will do is a question for other countries, but rather than waiting for a process to arrive at a final destination, Ireland has moved through the budget and this Finance Bill to bring certainty. Furthermore, the amendments we propose today will ensure nobody can attempt to circumvent in any way, shape or form the date of 1 January 2015.