Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance) | Oireachtas source

I have just come from a meeting of the Joint Sub-Committee on Global Taxation, to which Professor Jim Stewart was giving evidence. He was asked by Deputies from various parties to back up his assertion that the real corporate tax rate in this country - the so-called effective rate - is only 2.2%. He was categorical about it. Whereas the Government claims the corporate tax rate is 11.9%, virtually every international commentator and a minority of us in this House say that is nonsense and that, in reality, these big multinationals are paying a fraction of that amount. Professor Stewart was absolutely clear in stating the figure was much closer to 2.2%. He pointed out that in Irish tax law - not American tax law or any other country's law - the norm is that if a company is incorporated in this country, it is deemed to be tax resident here and that foreign-owned companies are the only exception to that norm. It appears that a different set of rules is applied to foreign-owned companies. There is one law for Irish companies and another law for the multinationals.

That double standard in how we judge companies' liabilities for tax purposes allows them to shift massive amounts of profits abroad and to claim the profits are made in the Virgin Islands, the Cayman Islands or Bermuda when, as Professor Stewart pointed out, these companies have employees here in respect of whom they pay PRSI, they pay VAT and they occupy offices in this country. Somehow, they claim they are owned and controlled in Bermuda or the British Virgin Islands, where they have no offices or employees, and do not even have telephone numbers. The Revenue Commissioners simply conclude they are owned and controlled in the Cayman Islands or the Virgin Islands. He rightly pointed out this is not a reasonable assessment of where they are owned and controlled. In so far as one can reasonably allocate their profits, any reasonable person would say those profits should be allocated here. Irish tax law states that a company incorporated here is normally regarded as tax resident.

Is it not obvious that we are facilitating incredible tax evasion from these multinational companies? That option is not available to Irish companies and small and medium enterprises. It is solely available to enormously profitable multinationals. I would like to hear the Taoiseach's response to that. Professor Stewart was very convincing and he knew the Irish tax code very well. Perhaps the Taoiseach could explain further. Professor Stewart also suggested that while we may not be the only country that could be described as having features of a tax haven, we are in the same category as Luxembourg, the Netherlands and Switzerland, all of which are also being investigated for being tax havens or countries with the features of tax havens. The way in which we interpret and apply our tax laws is facilitating this.

The Taoiseach stated that we do not have brass plate companies. I discussed this subject with Professor Stewart in a telephone conversation, and he confirmed in his submission to the sub-committee and in a radio interview that one could wallpaper one's house with all the brass plate companies in the IFSC. He put flesh on the bones of that when he pointed out that there are €2.1 trillion in assets in the IFSC. He asked why these assets do not show up on the national accounts. If even 1% of these assets appeared on the national accounts, they would amount to €20 billion. As the assets do not appear in the national accounts, clearly the companies are not paying taxes on them in any substantial way. Is that not the definition of a brass plate company? I ask the Taoiseach to explain that to us. It strongly suggests that, contrary to his assertion, the IFSC is thronged with brass plate companies which have no real linkages with the Irish economy. We cannot claim they are making a great contribution at any level to the economy.

As Professor Stewart pointed out, they are here purely because it is easy to minimise tax liability in this State. In that sense we are again displaying features, as he put it, of a tax haven. The allegations being made against us have serious substance, although it is important to note they are not just being made against us, and they are also levelled at Holland, Luxembourg and Switzerland. We are at the top of the league table but in a race to the bottom on corporate tax issues and allowing multinationals to facilitate these practices.

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