Michael Noonan (Limerick City, Fine Gael) | Oireachtas source

This is undoubtedly an interesting topic, but both questions are based on a US report on US tax law. It is not a report on Irish tax law. The report notes that there is nothing illegal about this tax planning arrangement and does not identify any failing in Ireland's tax code. This kind of taxation arrangement is run from the US code, not the Irish code, and it is not for us to remediate. We cannot. It is America's tax code that allows for this tax planning.

It is a complicated practice, as everyone knows. For example, the transfer pricing rules of America's Internal Revenue Service, IRS, as well as the rules preventing the deferral of US tax and royalty payments and certain other incomes are relevant to non-US subsidiaries of US multinationals undertaking to share the cost of US research and development. This ensures that highly valuable intangible property is partly owned outside the US. Cost saving arrangements in respect of the development of new products typically enable non-US subsidiaries to sell the new products in non-US markets without triggering immediate charges to US tax. US tax on profits of foreign subsidiaries with such arrangements is deferred indefinitely until the profits are repatriated by dividends or otherwise to the US parent company. That is a US arrangement, not an Irish one.

Our arrangement is transparent. We have a low corporation tax rate to which Fianna Fáil, Fine Gael, Sinn Féin and the Labour Party subscribe. The 12.5% rate is an incentive to attract inward investment. It works. However, we are not operating a tax haven. No one has ever suggested that we are.

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