Mr. Seamus Coffey:

I have views on it. Previously, I commented on not referencing the Deputy's raising of the intangibles issue. Deputy Doherty's party has raised the issue of using Malta for similar structures in various fora. I will offer a general comment. When the double-Irish was being discussed, it was frequently said that it was not a provision of Irish tax law and that Ireland could not change it on a unilateral basis. I tended to agree with that. It is not a surprise to find other countries outside the tax havens in the Caribbean where it can be established or set up. However, it is simply not a feature of Irish tax law. It arises from the interaction between the tax codes from several jurisdictions. Even if we were to change the arrangement with Malta, I imagine we could find other countries where similar tax outcomes could be achieved. The key issue is the amount of tax that is levied at the destination. If Malta chooses not to levy profits tax on intellectual property generated outside its jurisdiction, that is Malta's choice and I am unsure what we can do about it. It is a Maltese decision not to levy tax on these profits.

What do we want Ireland to do? We are looking at companies and their residence, which is a central part of this from the perspective of US companies. However, the residence does not really matter. The primary reason that US companies use subsidiaries registered in the same country is because in the US tax code there is a provision called the same-country exemption. It means that if an organisation moves money between companies in the same country, it does not trigger the US tax payment but maintains the deferral. However, if an organisation moves royalties between two companies registered in two different countries, that organisation is potentially liable to pay the US tax at 35%. There is a plethora of ways an organising can generate the deferral, for example, the check-the-box and the look-through rules. However, one issue with these is that they are temporary provisions of the US tax code and they are subject to a sunset clause - they could end. In contrast, the same-country exemption is a permanent feature of the US tax code and would require a vote in the US Congress to change. US companies go for two companies registered in the same country because of that.

The recent Amazon state aid case in Luxembourg featured a similar structure. The two companies were registered in Luxembourg. Money was flowing from one to the other. Again, it was a decision taken in Luxembourg not to levy tax on the profits accumulated by the ultimate company.

Again, the single malt is something that has been achievable for years. It was not introduced necessarily in Ireland. In any event, it is a Maltese decision not to levy tax on those profits. If a company was registered in Malta and carried out all its business in Ireland, where should it be resident?