Peadar Tóibín (Meath West, Sinn Fein) | Oireachtas source

I move amendment No. 4:

In page 77, line 34, after "activity" to insert "and be managed and controlled".

The first two amendments are interrelated. They detail the classification of the type of company to be established in the State.

The current proposals mean that a company must conduct some activity in the State. I believe this provision was established in 1998 and the idea was to stop the brass-plating of firms in Ireland. However, the Minister of State will understand that a loophole exists, which allows a company to be registered here but to be tax-resident in another state. This is where one comes to the idea of Irish-registered non-resident companies. A major worry for me is that shockingly, the Government does not have available a figure on how many such firms are in existence and one cannot manage if one cannot understand what are the figures. Tax residence is determined by where a company is managed and controlled from, and this simple amendment effectively means that a company registered in the State must also be managed and controlled in the State and must be tax resident in the State and make annual returns. If the Government is committed to dealing with the issue of tax avoidance, this is a great opportunity to so do.

It is important that Ireland does so for a number of reasons. Ireland's standing has reduced quite significantly internationally as a result of the understanding many countries have on the level of effective corporation taxes that firms pay. While the Minister of State might shrug and believe it is a matter of perspective, there are metrics and surveys to show that Ireland and the International Financial Services Centre in particular have fallen in standing as a result of the current scenario. The second important issue in this regard is that some of the details have shown that for some of these firms, effective tax rates can be between 1% and 6%. Given that most of the people for whom Members work, that is, the Irish public, pay taxes far in excess of this rate, it seems logical and fair that highly profitable firms which are registered here also would pay taxes commensurate with the level of profits they make. I ask the Minister of State to use this opportunity finally to close this loophole.

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