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

I recognise that some Members have differing views on one or two of the choices the Government proposes in ratifying the convention. However, it is important to acknowledge that ratification is a powerful weapon against aggressive tax planning. The small number of articles Ireland is not adopting will be kept under review as it would be open to us to opt in at a later date. It is important to highlight the significant changes Ireland is opting into and which will be introduced through the convention if the Dáil ratifies it. The following new anti-avoidance rules would be included in Ireland's tax treaties by the multilateral convention; anti-avoidance rules targeting hybrid entities; new residency rules to prevent mismatches arising due to companies being dual resident; an overall anti-avoidance test which is expected to be a game-changer in stopping treaty abuse; stronger anti-avoidance rules regarding the taxation of dividends and capital gains, and anti-avoidance rules to prevent the artificial avoidance of having a taxable presence. In addition, new and improved dispute resolution mechanisms will be introduced to facilitate cross-border trade and investment by ensuring that tax disputes cannot go on indefinitely. If the convention is not ratified, none of these important changes will be introduced into Ireland's double taxation agreements.

I cannot support the amendment proposed by Deputies Eamon Ryan and Catherine Martin, but I would like to address the questions it poses. As I said in my opening address, Ireland is opting into the articles in the multilateral convention that may be relevant to structures like the so-called single malt. Article 12 is simply not relevant to these structures as it has no impact on the residence status of a company. In reference to the single malt, bilateral discussions with Malta are ongoing and we are confident of finding a solution. US tax reform will already have eliminated or substantially reduced any tax benefits of operating such a structure, but we are committed to working with Malta to examine what further actions may be needed. Nearly 60% of countries which have signed the convention have not opted into Article 12. Ireland's position is therefore consistent with the majority of countries. Germany, Sweden, the UK, Italy, Denmark and 40 other countries have taken the same position as Ireland. However, we are signing up to three other articles in the convention, namely, Articles 13, 14 and 15, which prevent companies from artificially avoiding having a permanent establishment. While initial guidance has been agreed at the OECD as to how Article 12 should be interpreted, it covers a very limited number of scenarios. There remains significant concern and uncertainty about how the new rules would ultimately be applied in practice. This uncertainty is reflected in the way a large number of countries have opted out of Article 12. We are committed to keeping the position under review as it would be open to Ireland to opt into Article 12 at a later date. It would also be open to Ireland to include Article 12 bilaterally in any tax treaty should the treaty partner make a sufficient case for us to do so.

It is important to note that Ireland is signing up to the majority of options within the convention. The convention is a truly international initiative with 84 countries having signed up to it to date. It is important that Ireland ratifies the convention to show that we are serious about BEPS implementation. Ratifying the convention will demonstrate Ireland's commitment to international tax reform. Failure to ratify would be a serious blow to our international reputation and the efforts we have made in recent years to ensure Ireland is seen to be at the forefront of international tax reform. Any suggestion that Ireland is stepping back from the OECD's BEPS process could only be perceived negatively and would have consequences for our reputation and attractiveness for inward investment. I commend the motion to the House.

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