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

I propose to take amendments Nos. 160 and 165 together as they are thematically similar. Aggressive tax planning by multinational companies is a global problem that requires a global solution. We have demonstrated our commitment to being part of this solution by actively participating in international tax reform, enacting domestic legislative changes and supporting the development of effective tax systems in developing countries. Recent years have seen significant progress in global action to address the issue of aggressive tax planning by very large companies. We are an active participant in ongoing discussions at OECD level on such matters as how we can address the tax challenges of digitalisation. In addition, we have worked with our fellow EU member states to agree and implement an unprecedented number of directives on tax co-operation that have been highly successful in addressing aggressive tax planning.

Domestically, a succession of significant measures relating to corporation have been introduced in recent years. The work in this regard continues. The recent budget contained revisions to Ireland's capital allowances for intellectual property in order to ensure that such assets are fully within balancing charge rules, in line with international best practice for such reliefs in other jurisdictions. The Bill introduces certain defensive legislative measures which will provide that Ireland's controlled foreign company rules apply more strictly to companies with subsidiaries operating in jurisdictions that remain on the EU list of non-co-operative tax jurisdictions.

It is worth reiterating that aggressive tax planning arrangements are not designed by Governments but by advisers, lawyers and businesses that devise complex plans to exploit mismatches or gaps in legislation. Where instances of aggressive tax avoidance emerge, the Revenue Commissioners rigorously investigate and challenge such cases through the various anti-avoidance legislative provisions available to them.

The third strand of Ireland's resolve to address this issue is our commitment to helping countries in the developing world to enhance their tax regimes. Ireland's domestic resource mobilisation initiative was launched last year as a collaboration between the Department of Foreign Affairs and Trade, the Revenue Commissioners and my Department. The aim of the initiative is to provide practical assistance to developing countries in their efforts to strengthen their tax administrative capacity.

I would also like to inform the committee that in the near future I plan to publish an update on Corporation Tax Roadmap, which was published in 2018. This update will reflect on the significant measures we have taken and consider what future actions may be needed to ensure that our tax system continues to meet the needs of the modern economy. It will also provide an opportunity to reflect on the evolving international tax environment and the important work on international tax reform that continues at OECD level.

Regarding the points made by Deputy Naughten and his reference to the recent report in the Business Post, it is not my practice nor would it be appropriate for me to comment on the affairs of individual taxpayers. However, the study on which the article was based, which was carried out by the University of Bath in conjunction with some Dutch journalists, suggested that companies use the Irish tax system to reduce their liabilities several ways. Understanding this requires further clarification.

The first of these arrangements is the so-called double Irish. This issue was addressed in the Finance Act 2014. The phasing-out period for this measure ends this year. The report refers to the treatment of intellectual property under Ireland's tax system. However, the recent budget contained revisions to Ireland's capital allowances for intellectual property in order to ensure that such assets are fully within balancing charge rules, in line with international best practices for such reliefs in other tax jurisdictions.

The study to which I refer also references interest payments into Ireland. Multinational groups often structure their affairs so that one company performs treasury functions, including lending to other group companies. The borrower obtains a tax deduction for interest paid while the lender is taxed for interest received. Lending from low-tax jurisdictions into high-tax jurisdictions can result in a tax advantage for the group. However, the deduction in the borrowing jurisdiction will usually only be available if the transaction is structured on a commercial basis with a view to the borrower earning profits. If the jurisdiction of the borrower is not satisfied with the bona fides of the transaction and the commercial rates of interest charged, it can challenge any deduction made.

Deputy Boyd Barrett asked about the latest information I have on intra-group transfers. I do not have that information to hand but I will get it and share it with the Deputy.