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

I thank the Deputy for her question. I am aware of the report which was published by Oxfam on 27 March. The report makes a number of comments about the level of tax paid by certain banks in respect of their operations in each country of operation, including Ireland. The report also asserts that 31 different jurisdictions, including Ireland, should be considered tax havens. I understand that the report relies on publicly available data published by banks under the capital requirements directive, CRD IV. The report takes this data and uses it to assert the effective tax rate suffered by banks in the countries in which they operate. While I will not comment on the tax affairs of individual taxpayers, there are a number of reasons that using this data to assert a company's effective tax rate may create a misleading picture.

Calculating a company's effective tax rate requires looking at a company's profits as calculated under Irish tax law and the amount of tax charged on those profits under Irish tax law. This information is not included in the public country-by-country reports. For this reason, caution is needed when using the country-by-country information when commenting on a company's tax affairs. For example, the profit figures filed in the CRD IV reports generally relate to profit calculated for accounting purposes. Companies, however, do not pay tax on their accounting profits, but rather on their taxable profits. There are a variety of legitimate differences in how these figures are calculated in each country.

For example, all capital expenditure is treated differently for accounting and tax calculations.

Similarly, the tax on profit or loss figure in the publicly disclosed information may relate to tax actually paid over to Revenue rather than the tax charge suffered by the company. For example, where a company has losses carried forward from a previous year, this would reduce the amount of tax that must be paid over but does mean the company is not subject to a tax charge on its profits.

Officials in my Department are examining the report in more detail and have arranged a meeting with Oxfam to discuss the report's contents.

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I would like to point out that all companies in Ireland pay the standard 12.5% rate on their trading profits which are generated in Ireland. Higher rates of 25% and 33% apply to certain profits. My Department has previously worked with Mr Seamus Coffey, who is currently conducting a review on the corporation tax code, on a technical paper to provide clarity about the seemingly conflicting figures and methodologies for the effective rate of tax paid by companies in Ireland. This paper found that the effective rate paid nationally is between 10.3% and 10.7%.

I strongly reject the report's suggestion that Ireland is a tax haven. There is no clear analysis as to why Ireland would be considered as such and we do not meet any of the vague criteria that the report suggests are indicative of tax havens. The report itself notes that international institutions, such as the IMF and OECD, do not consider Ireland to be a tax haven.

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