Paschal Donohoe (Dublin Central, Fine Gael) | Oireachtas source

I thank all the Deputies for their contributions. It is important to open with some of the facts on this area that touch on some of the points Deputies Martin Kenny and Boyd Barrett made in their contributions. If one looks at the most recent information available, namely the estimates the Revenue Commissioners produced for 2017, it indicates that for those companies that pay corporation tax, the effective corporate tax rate they paid was 10.2%, an increase on the 10% figure in 2016. For the top ten companies the rate was 12.7% and for the top 100 companies it was 12.3%. The gap between the effective tax rate and the nominal tax rate is very small. In the debate that is under way on what level of taxation is paid by the largest companies, it is important to note the gap between the rate they are meant to pay and the effective tax rate they pay is minimal. That is a key point of difference with many other countries and jurisdictions we compete with that would have a nominal tax rate that would be far higher than Ireland's but then because of the very many deductions they would make available, they have an effective tax rate that is some way below that. That is not the case in Ireland.

Deputy Boyd Barrett made the point about the surge in profitability that has happened for large global companies. Consequent to that, there has been a huge increase in the amount of corporate tax profit that has been paid here in Ireland. The Deputy may be interested in the technical paper we published last week on the Department of Finance's website that looked to correlate the amount of corporate tax being paid with the share performance of very big corporate players. It found a real correlation between how much additional tax is being paid in Ireland and the business performance of many of the huge companies the Deputy has referred to.

On the different points made by Deputy Burton, the establishment of a principle of minimum global effective taxation would provide particular challenges for Ireland because if that principle was established the figure would at one point be below the 12.5% in Ireland but my expectation is that at another point in the future the figure would then move above that, which would have consequences for our ability to retain our tax rate as it is. That principle could yet emerge from the OECD. As Deputy Burton knows, within the OECD we do not have a veto. It is not like, for example, the European Union. It is an organisation that works on the basis of influence and negotiation. I am alive to what the consequences of a minimum effective tax rate being established through the OECD for the world would be for Ireland.

On the debate on digital taxation, the view I took 18 months ago is that if the European Union or individual countries went down the route of a digital services taxation outside of agreement with other global trading blocs, that would result in the risk of reaction from other countries that have been affected. I have been proven right in that assessment and that is what is now happening. For example, America is saying that if American companies are treated in a different way in other jurisdictions, America will respond to that. That has happened in the negotiations that have ensued between France and America, for example. I argued in front of the Committee on Budgetary Oversight that I did not believe it would be in our interest for Ireland to face such a scenario too. I was correct in my concern on what could happen if we went down the unilateral route in digital taxation. That is not a path Ireland should go down. Deputy Mattie McGrath supports the approach we are taking. Deputy Michael McGrath touched on the fact there has already been a big increase in corporate taxation receipts.

Deputy Boyd Barrett touched on the issue of intra-group transfers and how they are facilitated. In this Finance Bill, there are significant changes happening in transfer pricing that will have an effect on that issue. We are making those changes, mainly because we are part of the OECD approach on that work and also because we need to play our part in ensuring companies are paying a fair and effective tax rate and that there are no mismatches in transfer pricing rules that might allow the movement of revenue and profitability between different parts of companies in a way that is not sustainable. I emphasise that significant changes are happening in transfer pricing rules that are partly driven by the kind of issues the Deputy has raised.

I listened to what Deputy Martin Kenny said too. I make the point to him that for many different parts of our economy, the majority of jobs being created are outside of Dublin city. The main reason I supported the decision on the national broadband plan was to respond to the diagnosis the Deputy offered. I salute the approach the Deputy has taken to argue for a different political approach to the fears his constituents have. It is that kind of approach I want to play my part in. I also want to respond to the fears the Deputy has articulated. I strongly believe the approach we are taking with the roll-out of the national broadband plan will make a difference to the employment concerns in the many communities across the towns and villages of our country that the Deputy raised.

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