Eamon Ryan (Dublin Bay South, Green Party) | Oireachtas source

I move amendment No. 1:

To insert the following after “14th September, 2018”:“that the Department of Finance shall report back to Dáil Éireann within three months on responses received from the government of Ghana to its offer to insert as a protocol to the Convention between Ireland and the Republic of Ghana for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income and Capital Gains the ‘minimum standard’ anti-treaty-shopping provisions defined in Action 6 of the Organisation for Economic Co-operation and Development's base erosion and profit shifting process; and

further calls on the Government in accordance with its commitments to the principle of policy coherence for development in Article 208 of the Treaty on the Functioning of the European Union, its commitments under the Addis Tax Initiative, and the provisions of European Parliament resolution 2015/20158(INI) on negotiating double tax agreements with developing countries, to write to the government of Ghana proposing that this additional protocol may also include additional measures to safeguard source taxing rights, including;

— that furnishing services may constitute a taxable permanent establishment in accordance with Article 5(3) of the United Nations Model Taxation Convention between Developed and Developing Countries;

— that withholding taxes on royalties may approach the rates currently established in Ghanaian and Irish law; and

— that the source country may tax capital gains in accordance with Article 13(5) of the United Nations Model Taxation Convention.”

We speak in favour of the double taxation agreement with Ghana but we raise concerns, many of which have been outlined by the Deputies who have contributed, as to why we are not applying what we have just said in our earlier debate in respect of highest standards in this agreement, which should and could have been written taking into account the convention that we are joining. It is important because Ghana is an important country. Thankfully, as it rises, as several African countries are doing, our aid budget for it as a percentage of our overall aid programme is reducing. The influence of Ireland's foreign direct investment is significant and important for Ghana. This is not an insignificant treaty agreement and it is important to get it right.

The various concerns we have tried to outline in our amendment relate to the prospect that withholding tax provisions could be further reduced. These provisions are important in providing protection for developing countries in any trade environment. As I understand it, the royalty withholding tax rate will reduce from 15% to 8% under this treaty and the technical services withholding tax will reduce from 20% to 10%. This does not reassure us that the treaty provides the protection we think is necessary for a country such as Ghana. Even if those provisions are coming from the Government, this Parliament still has the right to say that we are concerned that protection is being reduced. This is particularly the case because, as I understand it, we are inserting a most favoured nation provision in this treaty. This means that if Ghana makes another double tax agreement which has lower rates in respect of royalty or other payments, an Irish company would be able to avail of those rates.

I am also concerned, in light of the latest advice from European bodies, the UN and other tax protocols, that we are not insisting on a serviced permanent establishment. We are not insisting that in any tax agreement done between an Irish company and a Ghanian company in respect of trade there be a real, commercial, physical employed entity in Ghana. The intention of our motion is not to stop the treaty, but to pick up on these issues. The Minister of State said in his contribution that he is hoping to come back with a proposed bilateral protocol to the treaty that would insert the various anti-BEPS measures to which we are signing up in the wider convention.

The Minister of State says that the Ghanian authorities replied and said that they are considering the best way forward for Ghana on this matter. I believe the amendment we are presenting gives a very useful stimulus in that regard because it asks the Department to come back within three months and to report to the Dáil on that correspondence. It means that we will not just forget about this and not bring it back. As Deputy Boyd Barrett said earlier, the difficulty with these international tax arrangements is that they are so complex they do not attract attention. Our amendment is a way to provide a reminder to us to return in three months. If we are signing this now because we have not had the time to implement the recommendations or the elements of the multilateral convention, this gives us the time. It gives a prompt to the Department and to both Governments and makes it clear that this Parliament wants to make sure that what the Minister of State has said in his speech is implemented. That would be the effect of our amendment, which I hope could be supported.

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