Pearse Doherty (Donegal, Sinn Fein) | Oireachtas source

Gabhaim buíochas fá choinne an deis labhartha ar an rún seo atá os comhair an Tí anocht. Tá Sinn Féin ag tabhairt tacaíochta don rún seo. Tá sé tábhachtach ó thaobh an phróisis BEPS. Níl sé gan locht. Níl dabht ar bith go bhfuil lochtanna ann. Tá deacrachtaí móra againn ó thaobh an rúin seo, cé go mbeimid ag tacú leis. Leagfaidh mé amach cuid díobh sa mhéid atá agam le rá. Caithfidh mé a rá gur próiseas iontach tábhachtach é an próiseas atá ag an OECD ó thaobh BEPS. Is próiseas fíorthábhachtach é. Tá a fhios againn go bhfuil athrú mór tagtha ar an saol agus ar an domhan sna blianta beaga a chuaigh thart ó thaobh teicneolaíochta, ó thaobh cúrsaí eacnamaíochta, agus ó thaobh na tseanstíle ina raibh daoine ag déanamh rudaí. Ní mar sin atá sé níos mó. Is ceann de na laigí agus de na fadhbanna a fheicimid ná go bhfuil stádas BEPS íslithe agus go bhfuil cúlú á dhéanamh ar an mhéid a bhí ráite sa chéad dul síos.

While I welcome the motion, I have my reservations which I will outline. The OECD’s BEPS process is hugely important given how the world has changed. The way technology and the economy impact on each other means the old ways of doing things simply no longer apply. BEPS is far from perfect and we have concerns that the initial aim has been watered down significantly. However, it is the best game in town at this time.

The multilateral convention is an important keystone in the BEPS process and we need to ratify it. However, I am disappointed that the Government’s method of implementation will be a minimalist one or at least one that falls significantly short in some very important ways.

The opting out of Article 12, as the Minister of State outlined in his speech, is the most serious reservation I have. This article specifically takes aim at companies artificially avoiding permanent establishment status through double-taxation treaties. It is terribly disappointing that the Government has taken the decision to opt out of this article.

When he signed the convention the then Minister for Finance, Deputy Noonan, said:

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.

Yet now at its implementation the State is opting out of that article, which actually prevented what he was talking about. The Government is choosing to leave the door open to some future double-Irish scheme to develop. It is a deliberate decision by the Government. After all we learned - or maybe not learned - it is little wonder that Ireland has a reputation for aggressive tax avoidance.

Likewise on Article 13 the Government has chosen Option B which will also allow for the continued artificial avoidance of permanent establishment status through applying a weaker test in specific activity exemptions listed in double-taxation treaties. I accept the Minister of State is correct in saying the majority of countries applying the instrument have taken the same approach to Articles 12 and 13 but they do not have the same reputation that Ireland has. We should not just look at what other countries are doing; we need to do what is right and best for us, and what is right for other countries, particularly developing countries.

I also wish to know why the Government is invoking a reservation on Part IV which covers arbitration. I believe we could have done better in how we chose to implement Article 7. The default option in the instrument and the option of most EU countries is to adopt a principal purpose of transactions, PPT, provision instead of a limitation on benefits, LOB, provision. The limitation on benefits applies a series of objective tests that must be complied with by the person claiming the benefits of a tax treaty.

The limitation on benefits is often preferable for developing countries. It is understandable why Ireland wants the PPT to apply, and similar rules are in EU directives. However, we could have chosen an asymmetrical option, where the treaty partner can apply an LOB rule and Ireland could apply the PPT rule. The Minister of State is correct in saying the vast majority of instrument countries are choosing the PPT with no asymmetrical application. However, that process should have been considered and included in how we implement this.

The Minister of State seems to be looking for congratulations today on this proposal, but it is not warranted. The State has huge issues in our tax system, both in terms of reputation and in real terms. Were it not for the OECD moves and the work of many activists, the Government would happily be kicking this can down the road.

The Minister of State is not here because he passionately believes in tackling aggressive tax avoidance. He is here because the State’s reputation is in the mud. He is taking a very weak option in implementing this.

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