Oireachtas Joint and Select Committees

Tuesday, 4 October 2016

Committee on Budgetary Oversight

Forecasts for Budget 2017: Department of Finance

11:00 am

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

In respect of corporation tax, one of the arguments about Apple at the moment is that if we were allocating profits fairly they would not be allocated here but to where the intellectual property was developed. On the other hand, Mr. McCarthy says we are going up the value chain because representatives of some of these companies walk into the companies registration box and, with the stroke of a pen, relocate intellectual property assets. They are not actually relocating real economic activity - they are just doing an accountancy trick. This may benefit us but is not about the movement of real economic activity. One cannot have it both ways. Either we are entitled to the tax from the €13 billion because the profits were booked here or we are not entitled to the stuff the company is relocating here. There is a bit of a dichotomy in this respect.

The company may now feel under pressure as the mood music changes and it is no longer sustainable to avoid tax in the aggressive way they have been doing. It may now have decided that the Irish tax jurisdiction is better from its point of view than the US, where it would be paying 37%. However, it raises the question of how a company books intellectual property profits. How does it cite them? It strikes me that we are talking about accountancy here, not real economic activity.

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