Mr. Seamus Coffey:

The Irish Fiscal Advisory Council does not have a view on this. If I take off my fiscal council hat and look at some of the work done on corporation tax for 2018 when we collected just over €10 billion, and the effect of tax on profits to generate €10 billion was in the order of 2%, one is looking at profits in the region of €500 billion. I know the numbers in Ireland are big, but they are not of that scale. To collect €10 billion at 12.5% rate, or even a 10% rate, requires profits in the region of €90 billion to €100 billion, which are pretty substantial. There was one measure introduced to try to reduce the potential volatility of our corporation tax back in October 2017, when the 80% cap was restored for capital allowance claims under section 291A and that will offer some reduction in volatility in corporation tax, but the amounts themselves are quite large. We could introduce an effective rate of 2% to 3%, but I think the amount of additional revenue that it would generate would be zero, because for profits earned in Ireland the effective rate is substantially higher than that and there are two reasons companies have lower rates. The Comptroller and Auditor General did an excellent report on the effective tax rates on the top 100 companies and the two reasons that certain companies had lower rates was first, because they availed of research and development tax credit, so perhaps we could introduce limitations on the extent to which that can be used; or second, the significant sources of revenue was foreign revenue, that is, it was income earned abroad and that they paid a dividend back into Ireland and that was counted as part of their taxable revenue. The fact that the tax was paid abroad, the companies did not owe additional tax in Ireland. From an Irish perspective, the companies had a profit with very little Irish tax being paid but that was because the tax was paid elsewhere.

We could remove those profits from our tax base and that would see the effective tax rate rise because one would be just looking at Irish tax and Irish profits. I think the volatility of corporation tax is an issue. One measure has been introduced to address it and perhaps others could. That is not to say that the issue of an effective minimum corporate tax rate is not important. It is on the agenda at OECD level and it is possible that in the context of the OECD, a minimum effective tax rate could be a threat for Ireland, but that depends on whether it is done on a country-by-country basis, which would be significant for Ireland, or on a global basis. We would far prefer to see it done on a global basis.