Mr. Jim Clarken:

Thank you for the opportunity to speak to the committee today. It is an important and welcome opportunity for Oxfam to engage with decision makers in a genuine and solutions-oriented discussion on how to increase tax justice to improve the lives of people in Ireland and abroad. Oxfam works in 90 of the poorest countries in the world and we seek to develop long-term solutions to global poverty and inequality. This is impossible to achieve as long as the current scale of global corporate tax avoidance continues to drain essential financial resources from developing countries.

I will not speak at length about the Apple state aid case but, instead, about how to apply the lessons from the case and ensure we develop a global tax system that ends the corporate tax avoidance that is particularly detrimental to developing countries. The UN has estimated that every year developing countries lose approximately $100 billion as a result of corporate tax avoidance schemes. This is enough to pay for the education of all the 121 million children who currently are not in school and for health interventions that could save the lives of 4 million children. It is outrageous, unjustifiable and morally defunct.

In the run-up to the 2016 general election, Oxfam Ireland commissioned independent nationwide attitudinal research on inequality and corporate tax avoidance. The research found that 82% of Irish adults polled agreed that the next Taoiseach should specifically address tax dodging, equal pay and access to quality public services. The survey also showed growing concern about large-scale tax dodging, with 86% of people believing that big companies and wealthy individuals are using tax loopholes to avoid paying their fair share of taxes. It is clear that the people have mandated the Government to act.

Oxfam recognises that Ireland has been involved in the OECD BEPS process and various ongoing processes at EU level to address corporate tax avoidance. International fora are the most appropriate avenues to deal with a number of issues related to corporate tax avoidance. We also recognise the important role the 12.5% corporate tax rate has played in our economic development over many years. Oxfam Ireland is not asking for changes to this rate. We acknowledge the strong and important role the multinational corporation sector plays in Ireland. However, we have serious concerns as to whether the existing processes Ireland is engaged in go far enough to really address the problem of global tax avoidance. Having worked on these issues for many years, we believe the following five areas need to be addressed as a matter of urgency.

A global tax body must be developed. The rewriting of global tax rules should be tackled by a body like the UN. The OECD and EU are not constituted or qualified to represent the international community and a forum which does not include developing countries on an equal footing will, inevitably, not take their interests sufficiently into account. Since 2012, the G77 has been calling on the UN to set up an international tax body to agree a truly global set of rules for taxation. We call upon Ireland to stand with developing countries on the issue and support the formation of a global tax body.

There must be increased transparency. Ireland has agreed to exchange country-by-country reports and tax rulings with its European partners, yet this falls well short of full transparency. None of this limited information will be available for public scrutiny by legislators, policy makers, civil society watchdogs or the media. It also will not be available to those most affected by tax avoidance, namely, developing countries and their citizens. We already have public country-by-country reporting for the financial sector in Europe, and this is an important tool which allows policy makers to identify potential tax avoidance strategies. There is no public interest in not extending this approach to all other business sectors. If the recent crash has taught us anything, it is that we need quality information to deliberate on and select policy options that result in outcomes that protect the public interest.

We must tackle profit shifting. It is obvious that one of the primary ways companies continue to avoid taxes in Ireland is by profiting shifting. We can see evidence of this in a variety of ways, such as our inflated GDP figures or the very high levels of excess profits over and above what might normally be expected based on real economic activities, which we estimate is in the tens of billions of euro. Despite this, Ireland's specific legislation on transfer pricing is exceptionally weak and does not give Revenue officials authority to investigate instances in which profit shifting may be used as a tax avoidance strategy. This needs to change.

Ireland needs to legislate for strong controlled foreign company, CFC, rules, as agreed to under the EU anti-tax avoidance directive. This should be done as soon as possible, preferably in the next budget. The main aim of CFC rules is to discourage profit shifting to tax havens outside the EU, which should benefit both developed and developing countries.

Another area that must be addressed is double taxation treaties. A 2011 report prepared by the UN, World Bank, IMF and OECD recommended that all treaties with developing countries should include an anti-abuse clause. Despite this, none of Ireland’s treaties with developing countries contain any anti-abuse provisions, even those treaties with Ethiopia, Pakistan and Botswana, which were concluded after 2011, following the recommendations. We call on the Government to ensure all double taxation agreements concluded by Ireland contain such anti-abuse provisions.

The final area we must address is spillover analysis. Ireland is to be commended on commissioning a spillover analysis of the possible effects of the Irish taxation system on the developing world. However, at the time the analysis was carried out, there was no access to country-by-country reporting by multinationals, so it was extremely difficult to assess where the flows originated. Given that country-by-country reporting has been mandated for Irish companies from 2016, we call on the Government to conduct a follow-up spillover analysis using the new data available, which may help to improve understanding of flows between Ireland and developing countries via third countries, and help target measures to end corporate tax avoidance.

Corporate tax avoidance is not a victimless crime. Because of the Apple ruling, we know all profits from iPhones and other Apple products sold in Europe, the Middle East or Africa are recorded in Ireland and little or no tax was paid on some of them. This is worth considering in the context of developing countries in Africa. Africa is a bigger mobile phone market than the USA and will shortly surpass Europe. Apple is cashing in on this growing market. Sales of the iPhone grew by 133% in 2015 in the Middle East and Africa. But African countries' tax revenues have not been benefitting from this boom. Even if just a small amount of the billions of profits that are generated were taxable in developing countries, the additional resources would make a huge difference to the people with whom Oxfam works and who are fighting every day to lift themselves out of poverty.

I will conclude by telling a story that shows the human impact of tax policy. It reminds us that when we talk about what seem like dry, technical accounting practices or reforms - with apologies to the accountants in the room - lives are at stake. Monique Koumate was expecting twins in the west African country Cameroon. When she went into labour and started experiencing complications, her partner took her to hospital. However, because they could not pay the small hospital fees, she was left outside the maternity hospital for hours in desperate need of urgent care. The doors were closed to her. Although Monique's family did their best for her, one twin was stillborn and the other died moments after birth. Monique Koumate died on the steps of the maternity unit. Three lives were lost just feet away from the medical attention they so desperately needed and which would have saved their lives. Cameroon has a severe shortage of doctors with just one for every 5,000 people. The government introduced a fee-based system for health care in a bid to bridge a funding gap and make services more widely available. Precisely because of those fees, care was not available to Monique. Illicit flows out of Cameroon are the equivalent of 63% of the country's health budget and the equivalent of the country's entire FDI and aid each year. It is not just the Government of Cameroon which is left short of funds to cover the cost of universal health care. For the west African countries at the centre of the Ebola crisis, health budgets were dwarfed by the figures lost to corporate tax avoidance and dodging.

We have a chance to build a more human economy in which the interests of the majority are put first, a world where there is decent work for all, where women and men are equal, where tax havens are something people read about in history books, and where everybody pays his or her fair share to support a society that benefits everyone. During the past 15 years, we have reduced extreme poverty across the world by 50%. The intention is, with the sustainable development goals, to eradicate extreme poverty by 2030. It is possible and feasible, but will not happen unless we adequately tackle the global problem of tax avoidance.