Mr. Niall Cody:

I thank the Senator for the comments he made at the start of his contribution about our activities. Some of the things we did over the two years of the pandemic were exceptional. The helplines to which the Senator referred were run at a time when people were working from home and we developed systems to allow that to happen. For people at my level, that is fine, but there were people at clerical officer level dealing with schemes that did not exist. They sometimes spoke to businessmen on the phone and they used to read the Revenue website to each other to reassure themselves as to what it meant. That is a testament to the people involved.

On the VRT issue, one consequence of the UK exit from the EU has been to turn the second-hand car market on its head. I know some of the statistics off the top of my head because I had a similar discussion with the Committee of Public Accounts last week. In 2019, 115,000 second-hand cars were registered for VRT. Up to two weeks ago, the relevant figure for 2022 stood at 34,000. That is a consequence of the changes in rules and not because of our systems. Cars coming in from Great Britain, as opposed to Northern Ireland, are subject to customs, VAT and VRT. Documentation must be produced for all of them. It depends on where the car was originally sourced and whether a European make had gone into the UK before coming to Ireland. In such a case, a transaction is subject to customs duty at 10%, VAT and VRT. As I said at the meeting last week, because we drive on the same side of the road as the UK, the second-hand car market before the UK left the EU was a single market within a Single Market. It is no longer a single market, with all the consequences that entails.

In a way, the VRT registration system has not changed fundamentally and it is the steps people have to take before they get to VRT. We do not have the ownership of the solution in that area. It actually changed the nature of some businesses. Their key business was to source cars and because of the size of the market in Britain and the nature of cars, the tax levels inbuilt in cars made it viable to import them. That model may well settle down a bit but it is still in a huge transition.

In regard to corporation tax, I do not have a crystal ball to look into. One of the things we very much do - this is one of the things I was very interested in when the corporation tax receipts started to show that significant increase - is to publish detailed analysis of what happened, and we have done that every year with as much detail as we can give, having regard to taxpayer confidentiality. What we tend to do is focus on and report on what has come in. We support the Department of Finance on forecasting in that we give it the insights that we have but the Department is the body that has the responsibility for forecasting.

The reality is that there is significant detailed technical work still to be finalised and agreed at international level for both pillar 1 and pillar 2 that will determine what the outcome will be. For pillar 1, there will definitely be a cost because the nature of the agreement at pillar 1 is a distribution of profits to market countries, so bigger countries with bigger markets will get a bigger proportion. However, there are still technical details about the order of the distribution and what element of countries’ profits are redistributed. It applies to multinational groups that have a turnover of €20 billion-plus with a profit margin in excess of 10%. It is estimated that there are about 100 companies worldwide and, of these 100 companies, probably in the region of 60% of them have a presence in Ireland, so we are right in the mix of that whole debate. There are still key issues to be worked out to see what is the proportion and the order.

On one level, pillar 2 seems simpler, if multinationals with turnover in excess of €750 million and a minimum effective rate of 15% is what is in scope, but there are still technical issues. I know there was tentative agreement yesterday in Europe so that, if it follows through with the political sign-off, there will be a directive which means that each member state would have to introduce the rules around the 15%. There are still key issues in regard to the interaction of the rules in each country, the order and who will get the additional taxing rights, and that is not yet finalised. We have not provided any indication of what we think will be the likely cost, on one side, and additional yield, on the other, because until we have certainty on those rules, they will just be guesstimates.

As regards our engagement with multinationals, we are organised in such a way that our large corporates division deals with all the large enterprises and we are actively engaged with all of those companies on an ongoing basis. Again, our primary responsibility is to ensure that each of them pays the right tax in the year and we are not so much into discussing their likely decisions. In any case, the decisions of multinationals and businesses are often made in their international headquarters. We do engage and, when it comes to each year's forecasts, we survey the top companies, we get as much insight as we can and we share that on a statistical basis with the Department to aid forecasting. Nonetheless, the reality is that forecasting of corporation tax is a really difficult issue. I often look at quarterly results from multinational companies and see the surprise in the markets even for the next quarter, so we can imagine what it is going to be like looking forward a year. To assess what is the impact in two years’ time is very difficult with the volatility.