Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance) | Oireachtas source

Financial Resolutions Nos. 5 and 6 seem fine to me. However, I want to express concern about Financial Resolution No. 4. The main mechanism through which some of the wealthiest corporations in the world avoid tax is through the category of intangible assets, such as patents on intellectual property, whereby big multinationals pay for the use of their own patents. For example, one subsidiary of a company pays another subsidiary of the same company for the use of its own patent and, by doing that, it can write down its profits. Effectively, it can charge itself whatever it likes.

If the sales and revenue of a company such as a pharmaceutical or IT company amount to €1 billion, it can decide that one of its own subsidiaries will charge it €900 million for the use of that patent, thus writing down its tax liability to virtually nothing. It is essentially a way in which big multinationals are allowed and facilitated to write their own tax bills. It is why the 12.5% tax rate, itself one of the lowest corporate tax rates in the world, is a complete joke. The big multinationals do not pay anything close to that because of their exploitation of this category of intangible assets.

I recommend that any economics nerds take a look at the table produced by Revenue every year with regard to corporate tax deductions, reliefs and allowances. The table covers approximately two pages in very small print and lists approximately 100 tax reliefs. Buried in this tiny print is a line on intragroup transactions. The intragroup transaction relief granted in the latest available figures totalled €16 billion. This is an increase from the previous year's figure of €9 billion and that of the year before, which was approximately €6 billion. One can see exponential growth in the tax reliefs being claimed in respect of intangible assets through these intragroup transactions, which is to say transactions between different subsidiaries of the same multinational corporation designed to write down taxable profits to negligible levels in order to pay no tax.

How does this measure in the budget book, which is very ill-explained, fit in to that scandalous picture? I invite Deputies to look at the briefing note in the Estimates book. It is three lines long and tells one absolutely nothing. We do not know what this measure does. It relates to balancing charges in some way but we do not know which way it will balance matters. Does it balance them in favour of the multinationals and allow even more assets into this category in order that already negligible tax liabilities can be written down even further?

This is the scandal of budgets and of economies in the modern world, including the Irish economy. While we spend all of our time discussing the crumbs, some of which we have to beg for such as the pandemic unemployment payment or additional expenditure on health or education, the cake is in this little document produced by Revenue, namely, its list of tax reliefs.

People need to understand the scale of this. In the last available figures, one can see that €189 billion was accumulated in pre-tax gross profits, the tax liability in respect of which amounted to approximately 5%. To put that figure of €189 billion in pre-tax gross trading profits in context, it is up from approximately €79 billion in 2010. Pre-tax corporate profits have more than doubled over the last ten years. That is absolutely extraordinary when these companies are paying approximately 5% tax on average. Of course, the big corporations that can exploit the category of intangible assets to avail of tax deductions or allowances to write down their tax liabilities are paying far less than 5%.

It is an utter scandal. They are not only robbing the people of this country but ordinary people all over the world. It is the major contributor to growing global inequality between rich and poor and the staggering, astonishing and shameful concentration of wealth in the hands of a tiny number of corporations owned by multibillionaires whose wealth is beyond the imagination of normal human beings. We are a major facilitator of such activity. The category of intangible assets is the key facilitator allowing these companies to do this. This motion has something to do with that although, interestingly, it has been explained in three lines that tell one absolutely nothing. I am deeply suspicious. I wonder who knows about this. Does the Minister who introduced the motion even understand it? It would be helpful to get an explanation of what it actually does. I am suspicious and, unless I hear a good explanation from somebody, I am inclined to vote against it.

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