Mr. Brian Keegan:

I thank the Deputy and while I do not know about black and white, I do know that one cannot be a little bit taxable. One either is taxable or one is not. If the Deputy bears with me for a moment, while we consider the overall structure, what happens is that a company pays tax at 12.5% but those after-tax profits must go somewhere. In the case of a multinational, they typically will go back to a holding company and ultimately out to the shareholders. When they go back to a holding company, they are taxed again and the holding company gets a credit for the Irish tax. Consequently, for a lot of the structures that are under investigation, we actually are looking at a deferral of that final charge in the holding company. The reason the so-called double Irish structure is used is not to not pay tax but to defer the payment of tax, admittedly sometimes indefinitely. I would be giving very different answers to the Deputy if I thought for one minute that these structures were extinguishing a tax liability altogether. They are not but are allowing multinational companies to leave profits offshore in order that those profits can be reinvested to further their European business. We rightly think of tax incentives in terms of bringing business into this country. In some states, the capital exporters, they think of using tax incentives to encourage their indigenous companies to go out into the broader marketplace. This is what we are looking at in a lot of the instances of the double Irish. I am merely reporting it as I see it. I am not defending it but this is how I see it.

The transfer pricing issue is a totally different kettle of fish. Transfer pricing means a company is not paying an associated company a fair market price for its profits or services and, as a consequence of that, is leaving more profits in a low-tax jurisdiction, thereby reducing the overall tax bill on a permanent basis. Therefore, there is a permanent loss. This is a problem for governments everywhere. It is not a huge problem for the Irish Government, as Mr. McCaughey pointed out, simply because our rate tends to be lower than that of everyone else. However, this is not something that can be condoned. Again, without wishing to be too black and white, because the issues are so difficult, there is an international standard for it. Ireland has adopted that international standard and does not deserve to be kicked on the transfer pricing issue simply because it does not apply to us a lot of the time.