Michael McGrath (Cork South Central, Fianna Fail) | Oireachtas source

I move amendment No. 31:

In page 70, to delete lines 24 to 37, and in page 71, to delete lines 1 to 30.

This amendment relates to section 42, which proposes the abolition of the double Irish in respect of corporation tax. This matter was discussed at some length on Committee Stage but I just want to reiterate my perspective on it. As the Minister of State is aware, certainty is a much sought after commodity when it comes to corporation tax. My main concern regarding this unilateral move on the part of the Government is that it removes the certainty which has obtained historically in the context of our rate of corporation tax. I accept that the Government is fully committed to the 12.5% corporation tax rate, as are all of the main political parties represented in this House. Last year's budget brought about a change in respect of stateless companies and this year's is amending the position with regard to the double Irish. The latter is despite the fact that the Minister for Finance, Deputy Noonan, stated in the House two years ago that the double Irish was not an issue in Irish law at all. However, he is now moving to change the position in respect of it.

Ireland competes with many other countries for inward investment from multinationals, etc. Our corporation tax regime has given us a critical competitive edge in that regard in recent decades. I do not want Ireland's competitive advantage to be diluted in any way. It must be remembered that this is not an abstract or theoretical debate. Rather, it is a debate which centres on the 150,000 jobs which have been directly created by multinationals and on the many thousands more which have been created as a result of foreign direct investment here. We do not really have brass plate operations in this country that are availing of corporation tax rules. The information which emerged as a result of the Lux leaks scandal relating to Luxembourg shows that Ireland really is in the ha'penny place. The base erosion and profit shifting, BEPS, process being advanced by the OECD is really only at an interim stage. This process is a long way from being finalised. The Government has made a calculation that there is a first mover advantage to be gained by closing off what many people regard as a loophole. It may be correct in that regard and I genuinely hope this proves to be the case. However, my concern is that Ireland is making its second change in 12 months. Those who are seeking to exploit any potential weakness, namely, our competitor countries, will inform multinational companies which are considering investing in Europe that they cannot trust Ireland because it is willing to move the goalposts and change its corporation tax regime when pressure is applied. I am concerned that they will state that such companies should not invest in Ireland or create employment here.

On Committee Stage, the Minister took action to close off the issue relating to the creation of shelf companies, which issue had been highlighted in the media. That was the correct course of action to take. I hope the Government has made the right calculation in respect of this matter. If I were in the Minister's position, I would not have made the change. I would rather have waited to see how matters develop internationally. As stated, the BEPS process has not yet been finalised but it is clear that the Minister's European counterparts, the European Commission and the OECD pressured him into dealing with the double Irish. Ireland alone cannot deal with the issue of multinationals using aggressive tax avoidance strategies to minimise the amount of tax they pay. Ireland is but one small cog in the machine. I sincerely hope, therefore, that we are not in any way disadvantaging this country in the context of the change being made.

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