Pearse Doherty (Donegal, Sinn Fein) | Oireachtas source

I move amendment No. 17:

In page 111, after line 42, to insert the following:“Report on intangible assets

28. The Minister shall, within 6 months of the passing of this Act, prepare and lay before Dáil Éireann a report on restoring the 80 per cent cap on intangible assets onshored between 2015 and 2017 that can be written off against profits at the rate of 100 per cent.”.

This amendment calls for a report on restoring the 80% cap on intangible assets that were onshored between 2015 and 2017 which can be written off against profits at a rate of 100%. Those intangible assets that were onshored after 2017 revert to the 80% rate. Prior to 2015, a rate of 80% was all that was allowed. We know the history of this and I discussed it at length with the Minister during the debate on last year's Finance Bill and during the Committee Stage debate on this Bill. A change was made in 2015 that allowed for international multi-national companies to onshore intangible assets. Previously they could only offset 80% against their tax liability but the then Minister for Finance, Deputy Noonan, decided to increase that to 100%.

I have noted before that when a suggestion was made to change the rate to 90% rather than the 100% rate that finally emerged in the Finance Bill, a senior tax policy advisor to the Department of Jobs, Enterprise and Innovation said that he disagreed with this on reputation grounds and argued that it would reduce the potential effective rate from 2.5% to 1.25%. He said that 1.25% was too low and that such a change could backfire and backfire it did. The rate was changed to 100%, which meant that the effective tax rate in certain cases was zero. Billions of euro worth of intangible assets were onshored in this period, with one particular company availing of this loophole in a major way. All of this played out in the international press. Apple restructured itself following the closing of the double Irish and, in particular, the stateless companies rules and used this mechanism to write down its tax liability to a very low level indeed.

I acknowledge that in last year's Finance Act the Minister closed this loophole but only did so for intangible assets onshored from that date forward. The problem is that next year and in every subsequent year, the assets that were onshored in the relevant period can be written against profits at 100%. The Minister for Finance commissioned the expert Mr. Seamus Coffey to look at corporation tax. He made it clear, as part of his recommendations, that the 100% rate should no longer apply and that it should revert back to 80%. He was very clear that what the Minister for Finance did last year did not go far enough and that it needed to be reduced for the intangible assets that were brought onshore during the period in question, 2015 to 2017. He debunked one of the arguments made last year that this is retrospective taxation, which it is not. We are not arguing that those who availed of this provision during that period would be penalised or that we would look for a clawback from them. What we are saying is that if they use those intangible assets to write down their tax liabilities in 2020, 2021 and so on, they can only do so at the 80% rate. That is the rate that now applies to any other company operating on the island of Ireland that has onshored such assets.

This is not small potatoes. This week we discussed the fiasco of the Government stripping away the flat rate tax allowances from moderate and low-paid workers. Sinn Féin welcomes the fact that this has been deferred but will fight the Government on that issue. I have written to the finance committee to ask that officials from Revenue would appear before it to answer questions on the review currently under way. In that case, we are talking about a couple of million euro and while it is not a small amount of money, it is across a large group of people.

This measure, on the other hand, brings in €750 million. A total of €750 million can be availed of if the Government implements the recommendation of the author of the expert report. There is no reason not to do this. This could go a long way in terms of dealing with some of the very difficult social problems that we have in Irish society, not least the fact that we have so many families and individuals that are homeless, so many children waiting for needs assessments and so many families struggling to get by because of the high cost of energy, childcare, insurance and so on. Significant resources can be made available to the State if the Minister accepts this amendment and puts it into effect by ensuring that intangible assets can only be used to write off against 80% of profits and not 100%, as the Minister has allowed for in last year's Finance Act for those that were onshored between 2015 and 2017.

See this speech in context