Paul Murphy (Dublin South West, Solidarity) | Oireachtas source

Some important work has been done recently and more will be done. The role of this country, stood over by this and previous Governments, as an important link in a chain of tax avoidance around the world by global corporations, which are robbing from public services in Ireland and, in particular, developing countries to the tune of $100 billion a year, will be exposed more and more. The Government will be badly exposed not only for not doing anything about this but also for having consciously facilitated it.

Last week, Christian Aid made available a couple of good papers that highlight the reality of this in terms of tax avoidance. The papers in question make matters real by, for example, comparing the tax revenue lost by so-called developing countries with the overseas aid they get from this country. Christian Aid concluded that the cost of the tax Zambia lost was 40% of the overseas aid they gained from this country. Further, according to Christian Aid, South Africa potentially lost out on withholding tax revenue of over three times the value of the Irish aid it received in 2015 thanks to the Ireland-South Africa tax treaty.

Another aspect of this matter has become very clear. The Minister has referred to the so-called "single malt" as a new loophole that has been discovered. Of course, it is not new. The single malt existed from the moment the corporations discovered that the double Irish was going to be phased out over a period. Big corporations such as Microsoft and LinkedIn immediately began to put in place processes to take advantage of the different tax treaties Ireland has with other countries - Malta is one, but it is not the only example - to continue to avoid paying all corporation tax. The Government knew about it. There is no way the Government did not know. There is no way that this is new. Eight days after the budget speech in which the former Minister for Finance, Deputy Noonan, under pressure as a result what was happening in terms of Apple's tax at that stage, spoke about closing the door on the double Irish, there were already discussions about the use of the single malt.

A very good example of how this operates in order that big corporations can effectively avoid paying any tax is given in one of the Christian Aid papers to which I refer. That example relates to LinkedIn and the myriad different corporations that exist as part of the wider LinkedIn family and their different tax residencies. This is reminiscent of the Apple operation and all various aspects of Apple International that managed, through the double Irish, to avoid paying any tax and, presumably, that continue to do so. The paper states:

LinkedIn Ireland is tax resident in Ireland, and thus subject to Ireland's 12.5% tax rate. However, its available accounts from 2010 and 2011 show that it made a substantial operating loss in these years, thus being liable for no Irish tax ... One of the reasons for the reduction of its profits is the fact that LinkedIn Ireland pays 25% of its turnover as a royalty fee to a second Irish-registered company, LinkedIn Technology Ltd, for the use of LinkedIn proprietary intellectual property. In turn, LinkedIn Corporation in Delaware USA [which is obviously a tax haven within the US], the ultimate holding company of the group, licenses the use of this IP to LinkedIn Technology Ltd. LinkedIn Technology Ltd is registered in Ireland but is tax resident in the Isle of Man, which levies no corporation tax on corporate profits ... LinkedIn's non-US revenue was already [$168 million] of which a quarter ... was placed as royalties in the Isle of Man. By 2016, its non-US revenue had ballooned nearly seven-fold to over [$1 billion].

This resulted in total tax savings of perhaps $100 million between 2010 and 2015. Different corporations set-up transfer pricing and profit-shifting between them to take advantage of Ireland's tax treaties and ended up paying no tax. The Irish Government knew about this. The double Irish is still in place for those corporations that were able to avail of it. They are able to continue to avail of it and, in effect, the Government is doing nothing about it.

There is an interesting observation in the Christian Aid papers regarding the so-called BEPS process. The Government likes to go on about this. It covers itself by saying that people should forget about the EU and all of that because it will deal with the issue through the OECD BEPS process. The Government tells us that it thinks the BEPS process is the best. Interestingly, however, Christian Aid highlights that Article 12 of the new OECD multilateral instruments arising precisely from that OECD BEPS process seeks to alter parties' tax treaties to widen the "permanent establishment" definition to prevent sales being arranged in one country but income being booked in another country. Ireland signed that instrument on 7 June 2017. The former Minister for Finance, Deputy Noonan, announced that the new instrument means:

If you make the widgets in Dublin, the tax liability on the profits from the widgets is an Irish tax liability ... It will be illegal to transfer tax liability to other jurisdictions to avoid taxes.

In reality, however, the Government, when it signed the multilateral instrument, opted out of Article 12. It opted out of a key part of the instrument in order to avoid actually cracking down on some of this tax avoidance. This proves a point. The BEPS process and going on about the OECD is simply a cover for the Government to continue to operate in a way that Ireland is the sixth worst tax haven in the world. The answers to deal with these are clear. All double-taxation agreements need to have anti-tax avoidance measures as part of them. The transfer pricing regime, which incredibly is currently only one way, only applies if Ireland-----

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