Brian Cowen (Laois-Offaly, Fianna Fail)

We have transparent tax arrangements in this country. We have positive rates of taxation, 44 tax treaties in place, a system of full exchange of information and the proper regulation of activities to the highest standards. We maintain a low general corporation tax rate by ensuring a wide tax base and the careful, prudent management of public finances. We collect €6.7 billion per annum in corporation tax. This tax arises from profits based on activity and substance. To take the international financial services sector as a specific example, the latest industry figures indicate that more than 19,000 people are employed in the three core sectors of banking, funds and insurance. Our system is transparent — deliberately — in order that everyone can see the attractions and benefits to the State. Other countries often have high nominal rates of corporation tax which mask the true lower rate in deductions through deals with individual firms. The Irish system does not operate in this manner and is transparent.

Ireland is bound by the same state aid code of conduct and rules of the European Court of Justice as all European Union member states. The EU treaty contains specific rules on the provision by member states of aid to industry. The European Union also has a code of conduct, a political agreement designed to curb harmful competition in business taxation, which is similar to the process at OECD level. Ireland is fully in compliance with the code and the OECD process. Our track record shows that we act swiftly to amend regimes to close down abuses and if similar circumstances arise in the future, we will do so again.

Ireland abides by the arm's length principle in these matters. We expect companies operating here to observe this principle and we have endorsed it in our tax treaties. As I indicated, there is no question of the legislation to which the Deputy refers having a "dramatic impact on US FDI here" for the reasons I gave in my primary reply because both Bills contain a list of countries drawn from the IRS filings and regarded as tax havens. Ireland does not appear on either list for the good reasons I have given in my secondary reply.

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