Simon Harris (Wicklow, Fine Gael) | Oireachtas source

As Deputy McGrath said, we had a very lengthy exchange on this on Committee Stage. We also heard exchanges on corporation tax in general on a number of occasions on Committee Stage. Those in this House who advocate increasing corporation tax — I am not referring to those from Fianna Fáil, Sinn Féin or the Government — would want to do a bit of reading and interacting regarding the impact of the charges. If these people are serious about wanting to play a part in government, they will have to determine the impact of their rhetoric on employment. It is not rhetoric from me because, on budget day, a number of documents were published, as was the ESRI report. The report examined the impact of increasing corporation tax from 12.5% to 15.5% and 22.5%. According to the ESRI report, had the corporation tax rate been increased to 22.5%, there would have been 50% fewer new foreign direct investment opportunities in the country. That is worth saying. It is encouraging to note that there was a report issued this week by the World Bank showing that, yet again, Ireland's headline rate, versus the effective rate, is very favourable. I am sorry to deviate from the amendment but believe this is worth saying.

I accept Deputy Michael McGrath's sincerity and bona fides on this. He approached the matter in good faith but we disagree. I accept he hopes we are right on this because the country needs to be right on it.

We discussed this issue on Committee Stage already. It has always been clear that the double Irish arrangement is not part of the Irish tax offering; it is just one example of the many international tax planning arrangements that have been designed and developed by tax and legal advisers to take advantage of mismatches between the tax rules in two or more countries. It is important to note that the idea that a Government or official in Merrion Street tried to devise a double Irish arrangement does not stand up to scrutiny. My colleague, the Minister for Finance, made the point that the double Irish arrangement was not devised in this country.

International tax law predates the independence of this State. However, the reality is that our company tax residency rules have not kept pace with international developments. Being associated with the double Irish arrangement, and the term "double Irish", is damaging Ireland's reputation. The corporation tax offering and the foreign direct investment offering are associated with the three Rs: rate, regime and reputation. We have discussed the rate. The four large parties are in support of its maintenance. With regard to the regime, we are introducing a number of measures in the budget to try to improve the offering of Ireland. Reputation is important. The phrase "double Irish" was damaging Ireland's reputation so the Minister decided to act. In essence, the residency rule has meant that companies that were not tax resident in Ireland could be presented as Irish because they were incorporated here. The change introduced by this Bill will mean it will no longer be possible for a company to use an Irish label of a corporation without it also being tax resident here. Removing the element of the structure that gives it the double Irish name should help restore our international reputation in the context of current EU and OECD initiatives to combat aggressive tax planning.

Ireland does not make changes in respect of corporation tax lightly. The Department of Finance consulted widely all interested parties on this issue through its broader public consultation process, launched in May 2014, well in advance of the budget. It is important to note that this change is but a small part of a much broader initiative set out in A Road Map for Ireland's Tax Competitiveness, which contains a comprehensive package of competitive tax measures designed to position Ireland to reap the benefits of sustainable foreign direct investment in the changed international tax landscape. This new roadmap will provide the foundations for Ireland to advance and prosper as a thriving hub for foreign direct investment. That map and the decision to end the double Irish provision have been warmly welcomed by the business community and many representative bodies. Deputy Michael McGrath was kind enough to acknowledge this on Committee Stage. We are, therefore, not in a position to accept the amendments.

Let me consider the points of Deputy Doherty, who comes at this from a different perspective, characterised by a desire to end the arrangement sooner.

We have, as both Deputies acknowledged, provided measures in the Finance Bill at Committee Stage to rule out shelf companies. It is really important that this closes with immediate effect for any new company trying to establish after 1 January, but that there is certainty and that there is time for those in transition to make arrangements. Certainty is so important to investment. Businesses plan their investment on the basis of a five-year period or thereabouts, and it is prudent that we would give this time. Therefore, I am not in a position to accept Deputy Michael McGrath's amendment.

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