Michael McGrath (Cork South Central, Fianna Fail)
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I am glad the Minister for Finance is in the Chamber to deal with the issue of the OECD base erosion and profit shifting deliverables report 2014. I feel it is important to raise the issue in the Dáil at an early date. I am sure the Minister will agree that it is critical to provide certainty on Ireland's corporation tax regime. All of the main political parties in this House subscribe to the 12.5% corporation tax rate. However, as important as the rate itself is the corporation tax system, which is administered by Revenue and underpinned by legislation. There has been considerable speculation as to what the report means for Ireland in terms of changes the Minister might seek to make in the budget. I seek reassurance from him in regard to his intentions because we should be under no illusions - I am sure he is not - that Ireland is operating in a highly competitive environment when it comes to foreign direct investment. Ireland's corporation tax rate and system have been fundamental to our success in attracting inward investment over many years.

It has been clear for some time that our corporation tax system is in the spotlight and, in many respects, under attack. There was commentary, much of it inaccurate, at US Senate hearings and in the UK House of Commons, and a European Commission probe is ongoing into the treatment of one company by Revenue. It is important that Ireland moves in parallel with other countries. The OECD listed a number of countries as having harmful tax practices, but Ireland was not one of them. However, a head of steam appears to be building to the effect that Ireland will make a unilateral move on certain aspects of our system. The double Irish has been highlighted as a case in point. The questions I have to pose - I do not have all the answers - are what is the cost of doing nothing on the issue and what is the cost of acting on it. Would it be sufficient to signal a roadmap of changes that the Minister intends to make over the coming period in respect of our corporation tax offering?

It appears to me from my discussions with multinational companies, their representative bodies and their professional advisers that Ireland's corporation tax offering has become less attractive compared to the UK's offering in recent times. The UK authorities have upped their game considerably. I am getting that feedback from the companies concerned, and I am sure the Minister and his officials are getting similar feedback on the UK's move on the patent box, the reduction in its corporation tax rate and the manner in which it treats overseas profits from a corporation tax point of view. Ireland needs to play hard but fair, and Ireland needs to play to win when it comes to foreign direct investment. I am loth to see a situation in which we make unilateral moves before other countries change their systems. Compared to many other countries, Ireland's system is open, transparent and underpinned by legislation. The Minister knows full well the importance of the investment and employment that multinationals bring to this country. I want to see that supported and protected and if he is going to make any changes, they have to be in the context of an overall package of improving our corporation tax offering, such as in regard to the treatment of intellectual property and research and development. These issues are fundamental to companies seeking to invest in Ireland.

Michael Noonan (Limerick City, Fine Gael)
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I thank the Deputy for tabling this important issue for debate because the base erosion and profit shifting, BEPS, process and international tax generally have received significant media attention recently. Due to a need for a multilateral solution to this international problem, the G20 asked the OECD to report with recommendations on how to tackle aggressive and harmful tax planning. The resultant OECD project is known as the OECD base erosion and profit shifting project. When a company undertakes base erosion, it is attempting to reduce its taxable income and thereby reduce the amount of tax it has to pay. The practice of profit shifting is to move profits from one jurisdiction to another.

In July 2013, the OECD launched an action plan on BEPS, identifying 15 specific actions needed in order to equip governments with the domestic and international instruments to address these challenges. The BEPS project is not seeking to harmonise tax rates across its members as the action plan because, as it states, "tax policy is not only the expression of national sovereignty but it is at the core of this sovereignty, and each county is free to devise its tax system in the way it considers most appropriate". Further, the project is not opposed to tax competition in member states but instead opposes harmful tax competition adopted by jurisdictions. It is fundamentally important to distinguish between these two types of tax competition. For instance, a low rate of tax is a policy lever that can be used by countries, especially smaller, peripheral countries, that seek to attract foreign direct investment for growth.

Many of the BEPS actions are technically complex but at its heart BEPS is a simple concept with two key pillars, namely, to align more strictly substance and taxing rights, in other words, companies should be taxed where they have their substantive operations; and to address harmful tax regimes. This is in line with Ireland's overall strategy for attracting foreign direct investment. Ireland has not been and will never will be a brass plate location. We only have and want substantive foreign direct investment - the kind that brings real jobs. That is why I believe that the OECD BEPS project offers more opportunities for Ireland than risks. We have welcomed the first set of BEPS reports, which were released last week, because they are the first milestone in this two year process. The reports examine a number of different areas and the draft recommendations are very positive. As I noted last week, Ireland agrees in particular with the conclusion of the report on the digital economy that the sector should not be ring-fenced from the economy as a whole. There has also been good progress in the areas of coherence, substance and transparency, and while further work is required in some of these areas, the reports are a further step towards multilateral co-operation on countering base erosion and profit shifting by multinationals.

At 12.5%, Ireland has the lowest general corporate tax rate in the OECD. Corporate tax rates are a matter of national sovereignty. This Government is committed to maintaining the rate. Ireland's offering of a competitive corporate tax rate, the availability of skills and our reputation for being business friendly give us a huge advantage that other countries will struggle to match. As international tax loopholes progressively get closed down, our low general corporation tax rate will become even more attractive. Indeed, as we continue to improve our offering for knowledge-based investment, research and development, and intellectual property, I believe that over the coming years we can grow our share of FDI related investment. In recognition of the importance of the BEPS project, my Department held a public consultation on it earlier this year to start a national conversation on how Ireland should best position itself in a post-BEPS environment. We received a lot of very interesting responses which will feed into my deliberations for budget 2015. I plan to publish the results of this consultation in the near future.

Michael McGrath (Cork South Central, Fianna Fail)
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All of us accept that change is coming to the international corporation tax environment. The question for Ireland is whether we anticipate those changes by seeking first mover advantage, if there is an advantage to moving first, or wait to see how other countries respond and move in step with them. I am concerned that, if Ireland moves unilaterally on the double Irish issue, the focus will move to other issues pertaining to our corporation tax regime in the absence of other countries making changes to their systems. We may lose a competitive edge and it would be the second significant change in 12 months to our corporation tax regime. The Minister dealt with the issue of stateless companies in last year's budget.

The issue of certainty is fundamental to corporation tax and inward investment decisions. My instinct is that Ireland should move on an agreed basis with other countries and be cautious about making any changes to our corporation tax regime. We should be under no illusions that behind all this international drive towards an improved corporation tax environment, other countries are looking at Ireland with envy because of the more than 150,000 direct jobs in multinationals here and the investment associated with that. They want our jobs and investment. It is an economic reality we must accept.

In the context of the consultation exercise and the report it is intended to publish, is the Minister considering changes in this area for the 2015 budget? I know the Minister cannot tell me what are the changes but is this very much a live issue in the budget deliberations?

Michael Noonan (Limerick City, Fine Gael)
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As the Deputy has said, Ireland has been doing very well with foreign direct investment. Statistics indicate that we get slightly over 3% of all foreign direct investment that goes into the European Union, which is approximately twice the proportion of European GDP represented by the Irish economy. We are in a good position. We will have to defend resolutely our right to set our own tax rates, and nobody in any of the fora which have discussed these issues has suggested we would be compelled to move away from the 12.5% rate. That rate is the centre point, together with the availability of skilled young people to work in industry. We are largely an English-speaking country and, together with our proximity to the European Union, that is part of a package.

The Deputy is right to state that this is being discussed in the US Congress and the House of Commons. Ireland has suffered some reputational damage because of the focus on the "double Irish" system. The OECD has issued the first of a series of reports, with the chief executive of its tax division singling out Ireland again for special mention. There is no doubt we are under international focus but in preparing for the budget I will take into account everything the Deputy has said. He has put out the balances of advantage fairly in the House.

Seán Barrett (Dún Laoghaire, Ceann Comhairle)
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As we have taken matters earlier than anticipated, Deputy McNamara is not yet present. I have asked that an SOS be made to him, so we might give him a few minutes if Deputies do not mind.