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

We are indeed taking decisions on these matters and implementing them. I am well aware of the consequences of the growing public debate over the international and domestic taxation of massive companies. I am also well aware of the legitimacy challenges that this poses for individual taxpayers and of the consequences for our national reputation. As one might expect given the gravity of the matter, I put a huge amount of my time as Minister for Finance into managing this.

It is important to reiterate a number of points here. I am completely committed to the OECD process because it has, to date, generated a global template for dealing with corporate tax matters. I have avoided commenting on the details of any particular company mentioned in the Paradise Papers or in the Panama Papers before that. As was reiterated by the OECD contributor on Morning Ireland today, however, we can draw the broad conclusion that a global solution is required here. Part of such a global solution would involve many companies moving at the same time or having the same pathway towards resolving this matter. We have both the OECD agenda and the Base Erosion and Profit Shifting, BEPS, process at the heart of much of what we have done and are looking to do.

I welcome the contribution made by Mr. Seamus Coffey's report on this matter and I have put it out for public consultation. The Finance Bill 2017 lays the foundations for many of the other changes and decisions I will be making into the next year and beyond in order to continue to bring the Irish corporate tax code into line with the OECD recommendations. I will carry all of this out. I want our corporate tax code to be both acknowledged by all to be legitimate and to leave us competitive. We will pursue both of these objectives and are on a path to doing so. The OECD contributor on Morning Ireland today recognised that, after a period of debate which is understandable given the open nature of our economy, Ireland has indeed put in place actions to ensure that we play our part in the co-ordinated actions necessary to deal with the consequences of unco-ordinated tax regimes all over world and with what certain companies and very wealthy have been trying to do. At the next Eurogroup and ECOFIN meeting, for example, recommendations will come from the European Commission on the creation and consequences of a so-called blacklist. Ireland will play its full role in dealing with these matters because it is in our national interest to have them resolved. This is what we are trying to do here.

What I have to manage, however, is the other side of the coin, namely, the fact that we have a corporate tax model that is both a legitimate response and a legitimate element of the economic model of a small, open country located where we are in Europe. As a result of Brexit and the process of moving towards leaving the European Union by the end of transition period, the United Kingdom is now already committed to making choices on its corporate tax model and on reducing the headline rate. This means that companies will look at what the United Kingdom is doing as well as at their own locations and investments here in Ireland, and this is something of which I also have to be aware as I outline a path for how we want to ensure that our own corporate tax model is both competitive and legitimate.

Deputy Burton talked about our reputation being shredded. I ask her to also take into account, however, the efforts we have made to deal with matters over the past few years as well as our clear commitment to the OECD process. The Deputy talked about secrecy but I think she also acknowledged that I, as Minister for Finance, owe it to anybody with tax relationships and commitments here in Ireland to be able to have private exchanges of information with the Revenue Commissioners. I cannot comment on that. It is a principle to which I must adhere but it must be fair and equal to all. Deputy Burton mentioned our reputation as being among the worst culprits. Again, however, the OECD representative acknowledged this morning that Ireland is playing and has played its part in already inserting OECD recommendations into our tax code. The former Minister, Deputy Noonan, signed up to further elements of the BEPS process some time ago and I look forward to enacting these measures. Further recommendations will come from the OECD across the first half of next year. We will work with these constructively so as to see how a consensus can be generated on how to deal with other aspects now emerging as important: digital taxation, for example. This committee would of course also hold me accountable if I were to follow any course of action that then turned out to be responsible for the loss of Irish jobs and investment. What I have described here is the pathway that I am following and what it is that I am seeking to manage.

With regard to what Deputy Burton proposes in this amendment, a paper of this nature was, as the Deputy is aware, produced in 2014. This paper acknowledged that there is no internationally agreed standard for calculating effective rates of tax. It agreed on three different methodologies for doing so, laid out the different options for each, and analysed in greater detail eight different figures quoted in respect of Ireland. The paper also concluded that the approach based on national aggregate statistics from the Revenue Commissioners and the Central Statistics Office is the most suitable. Based on data from the Central Statistics Office, using the net operating surplus, and from the Revenue Commissioners, using the taxable income, the report highlighted that since 2003 the effective corporate tax rate has averaged 10.9% and 10.7% respectively. More recent analysis by the Revenue Commissioners noted that the effective tax rate of companies in 2015 was provisionally calculated as 9.8%, representing an only marginal increase on the 2014 rate of 9.7%. In 2012 and 2013, the effective rate was 10.1%. I would note that while these percentages are lower than the 12.5% headline rate, this can be attributed to the availability of the small number of targeted measures, such as the research and development tax credit.

Given how recently this paper was produced, then, and given my commitment to the implementation of the OECD process to date, I do not accept Deputy Burton's amendment.