Mr. John McCarthy:

Deputy Tóibín raises two highly relevant issues. First, we had a discussion on the over-performance of corporation tax last year and I believe the figure was 49% or 50% higher than we anticipated in the budget. It is important to point out that we now have the national accounts showing the full 26% growth in GDP. If one examines the detail of the accounts, one sees that corporate profitability rose by 44% or 45%. The figures are, therefore, very much aligned. In one sense, we can explain what occurred last year, whereas we could not explain the growth rate of 7.8% when it was initially estimated by the Central Statistics Office. That is an important issue.

The second issue is the overall BEPS process. The mood music is changing on the international corporate taxation front, with some multinational companies becoming less aggressive in their tax planning. Instead of holding their intellectual property offshore, they are bringing it onshore. What does this mean for Ireland? We probably have first mover advantage in the sense that we have substantive multinational actual activities here, as everybody knows, and in the sense that multinationals which own IP are now taking a decision to co-locate their IP in countries where they have substantive economic activities. That is the reason for the substantial increase in IP in Ireland. It is coming through two channels, as discussed by Mr. Power earlier. First, the subsidiary here will purchase the IP from abroad. This is included in investment but it is also included in imports, which means it does not affect aggregate demand in the short term. What we saw in 2015 was IP being brought onshore through a different channel when companies rehoused a subsidiary's entire balance sheet - its assets and liabilities, with the assets being the IP - in Ireland. This process involves setting up a company in the Companies Registration Office and closing down a company in the Caribbean. Suddenly, the assets - the intellectual property - are in Ireland.