Michael D'Arcy (Wexford, Fine Gael) | Oireachtas source

I thank the Chairman. The Paradise Papers is the name given to a collection of documents published by the International Consortium of Investigative Journalists and was reported to media outlets worldwide in recent weeks. Coverage of the Paradise Papers has included coverage of the tax affairs of certain individuals and companies. I do not propose to comment on any individual taxpayer or taxpayers as such issues are confidential between Revenue and the taxpayer concerned. As is the case when any information comes into the public domain, it is a matter for Revenue to examine the information and determine if any tax issue arises. I am informed by Revenue that it is examining the Paradise Papers with a view to identifying all persons and entities, including Irish-registered companies, mentioned in the papers with a possible connection to the State. As these cases are identified, the information from the Paradise Papers will be compared with the information held in Revenue's own files. All information available will then be assessed and if individuals or entities associated with Ireland are identifiable or identified as possibly having tax issues, whether in the form of evasion or unacceptable tax avoidance, Revenue will take whatever action necessary to recover all taxes legally due together with all associated interest penalties and surcharges.

Revenue is determined that any tax evasion identified as a result of investigations arising from the papers will be thoroughly investigated. Where tax evasion is uncovered, Revenue will seek to have the maximum sanctions applied up to and including criminal prosecutions. Ireland recognises that co-operation between countries is essential to tackling the worldwide problem of tax evasion and avoidance if the international community is to succeed in ensuring that there will be no hiding places for those who seek to escape their tax obligations. Revenue will also continue to work in close co-operation with other tax administrations in the framework of the OECD's joint international task force on shared intelligence and co-operation in addressing issues raised by the Paradise Papers, and will, as appropriate, share information under existing legal frameworks.

Revenue's work in the area of identifying offshore tax evasion has been and continues to be a priority. In 2003 Revenue commenced an investigation into the use of offshore bank accounts and other financial products to evade tax. The amount collected by Revenue over the course of the investigation in tax, liabilities, interest and penalties exceeds €1 billion. Work is ongoing on a number of cases as part of this investigation. The international environment has changed significantly in the years since Revenue started to investigate offshore bank accounts and other offshore assets. Tax authorities worldwide now co-operate on a much wider and more intensive basis in investigating those who hide their profits or gains offshore than they did in the past. Activities such as the Foreign Account Tax Compliance Act, FATCA, an intergovernmental agreement to share financial account information with the United States, the EU's directive on administrative co-operation and the OECD's common reporting standard are all now helping to ensure that tax administrations have greater access to information in respect of the offshore assets and income of their residents. Revenue will make full use of information received from other jurisdictions under these new initiatives on offshore assets to identify and pursue those who have attempted to use offshore accounts, structures or assets to evade or avoid their tax obligations.

In the context of these new information-sharing initiatives now becoming available, the Government introduced specific measures in the Finance Act 2016 to ensure that, as of May 2017, tax defaulters whose default relates to offshore matters are unable to avail of the benefits of the qualifying disclosure regime. Anyone who did not come forward by 4 May 2017 to regularise his or her affairs now faces the prospect of substantially higher penalties; publication in the quarterly list of tax defaulters; and possible criminal prosecution. I am advised by Revenue that the number of disclosures made following this change exceeds 2700 and amounts to a value of almost €84 million.

With regard to the reference to the Irish banks in the media coverage of the Paradise Papers, Deputies will be aware that I have no direct function in strategic or operational decisions made by the banks in which the State is a shareholder. Decisions in this regard are the responsibility of the board of management of each institution, under the supervision of its regulator and the equivalent authorities in its jurisdictions that are relevant to its operations. I must ensure that the bank is run on a commercial and independent basis and in this regard a relationship framework has been specified that defines the nature of the relationship between the Minister for Finance and the bank. These frameworks can be found on the Department of Finance website.

With regard to AIB and Bank of Ireland, both of these banks have been very clear that they do not support or facilitate tax evasion and that they act in accordance with all relevant tax and data protection laws in any jurisdiction in which they operate. Both banks made decisions a number of years ago to close down their operations in the Isle of Man and on the Channel Islands, which are referred to in the Paradise Papers. The banks have also advised me that they fully comply with a series of disclosure orders made by the High Court in Dublin between 2004 and 2012 in favour of the Revenue Commissioners and in respect of information held by the banks' Irish operations as part of the Revenue's offshore investigation.

I am informed by Revenue that on 20 November 2017, it wrote to the financial institutions concerned, seeking disclosure of any information not already disclosed to Revenue which the institutions have relating to the opening of an account or depositing of funds by persons, including Irish registered companies, in the offshore operations owned by the institutions that the financial institutions have confirmed have now been closed.

In relation to Irish corporation tax rules, the leaks from the International Consortium of Investigative Journalists make a number of points about changes in the Irish tax system. It rightly points out that Ireland had already acted to address definitively the issues on stateless and double Irish companies. In the Finance Bill we have been discussing changes to our regime for capital allowances that will be introduced once the Bill is enacted.

I have consistently said the issue of aggressive tax planning by multinational companies is a global problem and requires a global solution. Ireland has played a full part in implementing international tax reforms. An update of Ireland's international tax strategy was published with budget 2018. The update provides concrete evidence of the measures already taken by Ireland to ensure we continue to meet the highest international standards in corporation tax. The Coffey review of the corporate tax code includes a comprehensive review of Ireland's corporation tax code and we have begun taking action on the recommendations in that report. As part of this work, we are holding a consultation process about how we implement the remaining OECD BEPS reforms.

At EU level, Finance Ministers agreed a list of jurisdictions that do not meet international good tax governance standards. As part of this listing exercise, member states receive significant commitments from a large number of jurisdictions to amend their harmful tax regimes, to improve transparency, and to commit to the implementation of the OECD BEPS recommendations. This has been a very successful exercise, and it shows the list is a powerful tool to encourage all jurisdictions to comply with agreed international standards.

I am also supportive of work at EU level on agreeing a proposal, known as DAC 6, which will require all member states to introduce rules requiring the mandatory reporting of tax avoidance schemes. Ireland is one of only three member states to have such a requirement in place already. The OECD BEPS process made recommendations on how mandatory disclosure rules should be designed, and I am supportive of a directive being agreed that is in line with these OECD best practice recommendations.

I reiterate that I am confident that Revenue will make full use of any information that comes to light in the Paradise Papers. Revenue has a strong track record in this area and will continue to cooperate with tax authorities worldwide to ensure there will be no hiding places for those who seek to escape their tax obligations. In respect of corporation tax, the continued implementation of the OECD BEPS reports, as well as further development of information reporting, sharing and exchanging agreements between tax authorities, is vital for aggressive tax planning opportunities to be shut down.

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