Mairead Farrell (Galway West, Sinn Fein)
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Thanks.

I recognise the work that was undertaken by the staff of the committee yesterday in organising an excellent day. I thank them and everybody who is supporting us in the operation of the ICT.

I will now deal with the amendment. The trading profits of companies in Ireland are generally taxed at the standard corporation tax rate of 12.5%. Some of the main features of the current corporation tax regime are its simplicity and the fact that it applies to a broad base. Changing this rate would involve increased complexity and could change the attractiveness of our corporation tax offering. The Deputies may be aware that the Department of Finance carried out a comprehensive economic impact assessment of our corporation tax policy in 2014. A distinctive feature of the economy is the high share of activity accounted for by foreign direct investment, FDI. As part of this assessment, the Economic and Social Research Institute, ESRI, analysed firm-level data on over 3,000 newly established multinational subsidiaries in 26 European countries. It found that if the Irish corporation tax rate had been 22.5% over the period examined, the number of new foreign affiliates entering the country would have been significantly lower.

The implications for Ireland are clear. An increase to the 12.5% corporation tax rate could be expected to damage inward FDI flows and reduce investment and economic activity in the State, with consequential negative impacts on the overall corporation tax yield and employment in the State. For the year to date, corporation tax receipts have continued to perform well, notwithstanding the current economic circumstances. The sustained corporation tax receipts are critical to maintaining Exchequer revenues and supporting the Government’s measures to support both individuals and businesses that have been negatively affected by the pandemic.

We are fully engaged in international tax reform and, in conjunction with other EU and OECD member states, have introduced in recent years extensive reforms aimed at tackling aggressive tax planning. This includes reform of company residence rules and transfer pricing rules, the introduction of new controlled foreign corporation, CFC, rules, anti-hybrid rules and an exit tax, and improved transparency and reporting requirements.

Taking all these considerations into account, I cannot accept the amendment.