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

I thank all Deputies who contributed to the debate on this important subject. We heard a wide range of perspectives and I believe this diversity of views enriches the debate. I cannot address all the points made by Deputies in the time available but I am keen to respond to some specific points made.

Deputy McGrath discussed Ireland's corporation tax take as a percentage of GDP and as a percentage of total tax revenue. I welcome Deputy McGrath's acknowledgement that our corporation tax receipts are in line with or even above the relative percentages in other EU and OECD countries.

Corporation tax receipts to the end of September of this year were almost €4 billion, a 45% increase on the same period last year. While these figures can be difficult to interpret, our analysis suggests that the greater-than-expected performance in the year to date is broad based and primarily relates to improved trading throughout the entire economy. These strong corporation tax receipts underline the important contribution businesses make to the Irish economy.

Deputy McGrath and Deputy Boyd Barrett rightly highlighted concerns about multinational profits being shifted to tax havens, in particular through how transfer pricing rules are applied. Addressing this concern has been a key focus of the base erosion and profit shifting project. Changes to the OECD transfer pricing guidelines as a result of the BEPS project will significantly reduce the ability of multinationals to shift income to cash box companies in tax havens. The BEPS package revises the guidance on the application of transfer pricing rules to prevent taxpayers from using so-called cash box entities to shelter profits in low or no-tax jurisdictions.

It has been recognised that the existing international standards for transfer pricing rules can be misapplied so that they result in outcomes in which the allocation of profits is not aligned with the economic activity that produced the profits. The BEPS reports have targeted this issue to ensure that transfer pricing outcomes are aligned with value creation. This corresponds with Ireland's tax strategy, whereby we seek to align the right to tax with real economic substance and activity.

Deputy O'Sullivan raised the question of the UN being recognised as an international body on tax. The Irish position has always been that the issues of base erosion and profit shifting are best addressed by a multilateral solution and that the OECD has the recognised international experts in this area. It is, therefore, important that the work of the EU, the UN or other intergovernmental work on tax takes into account the ongoing work at the OECD, and that a twin-track and potentially conflicting approach is avoided.

Ireland is a small open economy with a heavy concentration of foreign direct investment. The 12.5% corporation tax rate is critical to supporting our economic recovery and employment growth. Research by the OECD also points to the importance of low corporate tax rates to encourage growth. In ranking taxes by their impact on economic growth, corporate tax was found to be most harmful.

I urge Members of the House not to conflate or confuse the policy of attracting foreign direct investment with a policy of tolerating aggressive tax planning. Just because Ireland attracts high levels of foreign direct investment does not mean that we encourage base erosion and profit shifting or aggressive tax planning. Yesterday, the Minister of State, Deputy Harris, outlined in detail the measures we have taken to improve our tax system and protect our reputation, including our engagement in the OECD BEPS project and our plans to implement its recommendations.

As I said earlier this week, and as the OECD recognised, Ireland will be one of the first countries to introduce country by country reporting in line with the OECD’s recent recommendations. We have always supported a policy of fair tax competition, within the confines of the international rules and principles in this area. I thank Deputies for their sincere engagement with the debate and their comments. I commend the Government’s counter-motion to the House.

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