Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance) | Oireachtas source

Yes. We need to go into this detail to establish whether the knowledge development box will prevent the sort of tax evasion or the aggressive tax avoidance of the past. If this committee serves any purpose, it needs to go into this detail.

The gross trading profits in 2007 were actually €10 billion than more they were in 2009, but the amount written off jumped by 200%. Therefore, the taxable income went from €56 billion in 2007 to only €37 billion in 2009. This is blatant tax avoidance using intellectual property. As I pointed out to sub-committee dealing with this, I did not fully understand how this worked until I got an e-mail from an anonymous whistleblower who worked in one of these companies, who explained very simply how they did it. He said they would just adjust the amount they charged to royalties or intellectual property according to what profit margin they wanted. They could literally decide what profits they wanted to make. That is how they were operating. There have been these absolutely unbelievable increases in the amount they are writing off, and are allowed to write off, under the old scheme.

The first thing to say is that the Government has not got rid of the double Irish, the mechanism through which they have done this; it is being phased out. The Government has given them the time. The companies that have been doing this will continue to be able to do it for the next few years until they acquaint themselves with the knowledge box.

In response to Deputy Tóibín, the Minister of State said he did not anticipate that much uptake in the first year. They do not need to do it in the first year because they will continue with the double Irish, but they will slowly acclimatise themselves to the knowledge box. Given that this is how they engaged in blatant tax avoidance in recent years, what assurances can the Minister of State give us that the knowledge box is not just the same thing? It all turns on the question of the value a company can assign to patents and intellectual property.

The Minister of State has just made the really big admission that the sales that derive from the qualifying intellectual property will be able to benefit from the knowledge development box tax break. There it is. All they have to do is make the very slightest adjustment to the intellectual property. Deputy Tóibín spoke about medicines and stuff. Making small changes in medicines can actually result in big changes. It is not medicines that we need to worry about here. These are the tiniest cosmetic changes, or they could appear to be significant changes but actually be cosmetic changes. We know the companies involved: the big IT companies, including Google and Facebook. They can make cosmetic changes. They might even appear to be significant changes, but they are not significant because they are always upgrading the stuff, with new versions of this, that and the other happening every few weeks. It is really just variations on basic themes.

However, those variations will then be constituted as new intellectual property, with new patents associated with them, and all sales deriving from those products will be written off for tax purposes. The Government has given them six years to refine this measure, just in case there are any difficulties, because we know the Government is under pressure from certain voices in Parliament, but, more importantly, it is under pressure internationally on this matter. The Minister is clearly having lots of consultations with the multinationals and they are being given a six-year phase-in period to refine how they can fully exploit this new tax loophole.

It is important to understand just how much we are losing. We are in an extraordinary position in which the Government does not want a possible €19 billion from one company alone. That is the upper estimate of what Apple would have to pay us back if it were to pay back the tax that it appears it should have paid to us.