Paschal Donohoe (Dublin Central, Fine Gael) | Oireachtas source

I am aware of the publication of Christian Aid's report on tax, which highlights a potential aggressive tax planning structure that it believes has been used by some multinationals. The report alleges that Ireland's corporate tax residence rules and our tax treaties facilitate this structure.

Our tax residency rules were amended in 2013 and 2014 to shut down known aggressive tax planning structures. Those rules are now fully in line with international best practice and are similar to the rules in other countries, such as the UK. Similarly, the corporate tax residence rules in our bilateral tax treaties are fully in line with long-standing OECD and UN recommended best practice. Additionally, the Finance Bill will begin the process of ratifying the BEPS multinational instrument, which will introduce important anti-avoidance clauses into Ireland's tax treaties.

My understanding is that the structure referred to in the amendment is designed to avoid the operation of US anti-avoidance rules rather than to reduce the amount of tax payable in Ireland. Of course, the US tax reforms currently being discussed in America could end such structures that seek to abuse US tax rules.

The issue of aggressive tax planning by multinational companies is a global problem that requires a global solution. I agree with Deputy Burton that dealing with this issue through fora such as the OECD is essential. I have not commented on any individual company that is named in the papers that have been released, including the most recent disclosure, but I contend that a general lesson has emerged from the papers. Within hours of a country making a movement on its tax policies, large companies will compare that change versus existing policy in other countries. By examining the mismatches or opportunities created between policy in, for example, Ireland and policies elsewhere, including different levels of corporation tax, opportunities for planning are created. I am committed to addressing this issue through the OECD.

Where it is in our power to act, we have taken action. I have cited examples. Similarly, the ratification of the BEPS multilateral instrument to amend tax treaties and the implementation of other actions will go a long way towards shutting down aggressive tax planning. I have asked my Department to revert to me on this matter and to inform me of what action is needed to deal with it bilaterally or on a domestic level. When I receive that information, I will decide whether further action is needed. I do not want to see continued growth in the kinds of practice that undermine the legitimacy of the collection of taxation on a national or global level, but change like this has to happen in a co-ordinated manner. If Ireland makes changes on its own, the problems and the opportunities will shift elsewhere.

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