Paschal Donohoe (Dublin Central, Fine Gael) | Oireachtas source

I wish to be clear on one point from the start. Because this measure was passed via a financial resolution on the night of the budget it is in effect from now. The measure became available and applicable from 11 October 2017. In relation to the various points Deputy Doherty has put to me, before I refer to them I will make the point that the opportunity that is ahead of this country at the moment is one that other countries are pursuing and are aware of, namely, to be in a position where we have a combination of commercial activity, manufacturing activity, research and development activity and the registration of IP assets, all from the same company located within Ireland. We have the potential to realise that because of the number of employers we already have located in this country whose companies tend to be associated with and tend to have intellectual property assets that have a high value. As I look out, with many of the different issues that we have to manage, I see the prospect of us being able to achieve that form of co-location, as something that would be very valuable for Ireland. In terms of the decisions that I have made in relation to the Finance Bill and this particular amendment, I will outline the reason I have decided to make it applicable from 11 October - it is applicable on a forward-looking basis - the Deputy is correct that it was a policy choice. The legal framework was there to do it. My judgment is that at the core of our corporate tax framework is the concept and value of predictability, of being able to explain to people that if they locate jobs and investment in our country that we will tax them in a certain way going forward and that people are clear on that.

My view was that if I introduced a measure like this that was retrospective in the context of assets that had already been moved here, it would deal a massive blow to my ability to be able to argue that our corporate tax code and the policy relating thereto are predictable, clear and certain. In essence, I would have been claiming that we would now change how we would tax the assets a company had moved in here in the past as well.

Deputy Pearse Doherty touched upon this point. We are talking about the timing of payment of tax; it is deferred tax. The Deputy stated that this might not apply because we might get an income stream from a company now because of how we tax the intellectual property asset. The company might not be around in a number of years, however, at which point the reliefs relating to the depreciation of the asset would be gone and we might not be able to claim revenue from that company. That is not a way in which I can structure tax policy. I cannot structure tax policy on the basis of my personal view or that of the Government as to whether a company will be around in the future. If companies are located here, are employing here and have investments located here, we must assume they will be here for a period. Many of the companies that have been at the heart of the recent debate have had operations located in Ireland for many years. I will not get into the debate over the tax affairs of a particular company tonight because I must respect its confidentiality as I would for any other taxpayer.

On the timing of this decision and the previous one, I have not had contact with any individual on the matter. Mr. Seamus Coffey gave me a report. On the basis of that report, I made a decision, in consultation with my Department and other Departments, on what I believed was the right choice. I no more went out and sought the opinion of individual companies on this matter than I did with any other measure in this Finance Bill. I made what I felt was the overall right decision for the country.

Before the change was made, the threshold stood at 80% and then it went to 100%. At the time it went to 100%, many of the peer countries to which we would have compared ourselves would have treated intellectual property assets in the same way. It is the right decision to introduce a cap in respect of the depreciation of intellectual property assets and how this is dealt with because of the scale of assets on which we are focusing. When the decision was made to move it back to 100%, that was the case in other countries to which we would have compared ourselves and countries against which it was important for us to be competitive.

Having said that, I believe this is the right stance for us to take. It is also apparent to me and to all who debate and discuss these matters that the scale of the assets being moved around is bigger than in the past. What has had a decisive effect on the attractiveness of Ireland as a place in which such assets could be located is the effect of the OECD work that has happened throughout the world, particularly in the past 12 to 18 months, and that means it is no longer possible to locate these assets in other locations in which they would have been located in the past. As a result, companies want to find locations for the assets. It will be of long-term value to Ireland to have the assets located here, taxed in the way I propose and co-located with commercial, manufacturing, and research and development activity. I am making this decision in the Finance Bill in the context of that view.