Michael McGrath (Cork South Central, Fianna Fail) | Oireachtas source

There is real value in having certainty around our corporation tax offering. As such, we must be careful in making changes that could undermine that offering and, as a consequence, our ability to continue to attract foreign direct investment. The system we have is statute-based, with the deductions that result in profits being reduced to a certain level before the tax rate is applied set out in legislation. They include research and development tax credits, capital allowances and losses forward. The headline profits are reduced to taxable profits and the rate is then applied. We have had reports comparing Ireland's effective rate of corporation tax favourably with that of other countries with a higher headline rate of tax. Different jurisdictions have very different systems in place.

Listening to the debate on these issues, one would be forgiven for thinking that corporation tax receipts were not booming, which they absolutely are. In fact, it is estimated that some €10.5 billion will be collected from this source by the end of the year. The issue we have had in terms of profits being shifted from one jurisdiction to another is principally in the area of transfer pricing and royalty payments. That system is the subject of significant international change through the OECD's base erosion and profit shifting, BEPS, process, which is right and proper.

It is not fair that companies would have an opportunity to shift profits, without any substance to that transaction, from one jurisdiction to another. In the round, we have to defend our offering and our corporation tax system. It is transparent and we have to continue to co-operate with the international reforms through the OECD in dealing with transfer pricing.

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