Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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5. To ask the Minister for Finance if he will provide details of the proposed knowledge box tax scheme being worked on by his Department; and if he will confirm reports that the Government is consulting leading multinationals based here on the design of the proposed new scheme and the way he plans to ensure the knowledge box does not become another mechanism for tax avoidance by major corporations; and if he will make a statement on the matter. [42043/14]

Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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Last week, while low and middle income families were preparing to get out on the streets to protest against the unjust water charges, it was reported that the Department of Finance was working with multinational companies to discuss the patent box proposal. Is it true that it was clearly indicated that the Department was reassuring multinational companies that no further tax burden would be imposed on them as a result of the changes to the double Irish scheme and the new patent box proposal? Is it fair that such companies are being reassured that they will have to pay no more tax, while ordinary people are being crushed?

Michael Noonan (Limerick City, Fine Gael)
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In last month's budget I announced several changes to Ireland's corporation tax regime as part of an overall strategy to play fair and win. This included a change that will bring Ireland's company residence rules into line with those in the rest of the OECD and end the so-called double Irish scheme. This was balanced by a number of competitive enhancements contained in the roadmap for Ireland's tax competitiveness.

This strategy was underpinned by extensive research undertaken and commissioned by my Department in 2014, which has now been published. One of the key findings of the research is that the FDI sector is very important for economic growth and employment in Ireland and that Ireland needs a competitive corporate tax offering to attract foreign direct investment. In particular, we need to ensure a competitive offering for knowledge-based investment which is related to research and development and intellectual property.

In recognition of the fact that investment and growth in OECD economies is increasingly driven by investment in intangible assets, putting in place an attractive intellectual property offering is key for Ireland's success in attracting foreign direct investment. That is why I made a clear statement on my intention to introduce a competitive income-based regime for intangible assets in Ireland which will be called a knowledge development box, KDB. I view this as a positive measure for Ireland and my intention is that the Irish KDB will be among the best in class on offer internationally. In order to gather views from as broad a spectrum as possible on what this may entail, I will launch a public consultation process before the end of the year on how the Irish KDB should operate.

As is the case with all public consultations undertaken by my Department on corporation tax, input has been welcomed from all sections of society. A number of parties came forward to give their views on the public consultation on the OECD base erosion and profit shifting process - the so-called BEPS project - from earlier this year, including groups which represented multinationals based in Ireland, political parties, non-governmental organisations and individual citizens. I expect the consultation on the KDB to be no different and encourage all interested parties to have an input into this process.

It is the intention that the design of the KDB in Ireland will be along the lines of what are commonly known as patent boxes which have been in place for many years in countries which compete with us for foreign direct investment. The measures in place in our competitor jurisdictions are the subject of ongoing discussions at the OECD and EU levels as regards their compatibility with the international rules around fair tax competition. As I said in my budget announcement, it will be necessary to ensure the Irish KDB meets the standards that remain to be agreed to by both the OECD and the European Union.

Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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The double Irish was a massive tax avoidance scheme by the multinationals which centred, to a large extent, on the way in which they could charge for the intellectual property rights of subsidiary companies which were tax resident nowhere and, consequently, avoid paying billions of euro in tax. Is the patent box not exactly the same because it centres on intellectual property? It is about offering further tax reductions to corporations here which pay some of the lowest levels of tax anywhere in the world. Yet again, they will be able to avoid corporation tax through this mechanism. Is this not replacing one tax avoidance scheme with another? It was reported last week that the Minister's Department was working with multinational companies and that, when in the United States, the Minister for Jobs, Enterprise and Innovation, Deputy Richard Bruton, had met 17 leading multinationals to reassure them that the patent box scheme would not in any way penalise them in terms of having to pay a little more in tax. Is that true? Is this fair when ordinary people are being absolutely hammered?

Michael Noonan (Limerick City, Fine Gael)
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There are 200,000 or more ordinary people, as the Deputy described them, working in foreign direct investment companies in Ireland and we want to ensure that not only are these jobs preserved but that they grow in number and prosper. We abolished the double Irish, which was never an invention of the Irish tax authorities. The tax avoidance arose in matching gaps in different nationalities' taxes and an advantage was gained, but it was never marketed by IDA Ireland or any other Government authority as an inducement to come to Ireland. It is being removed in the Finance Bill 2014 and we will have a chance to discuss the details in the next couple of weeks as we go through the Bill. The intention behind the knowledge box is to ensure we remain competitive. The United Kingdom, Holland, France and Spain have patent boxes and it is the intention of many other European countries to have them. Modern industry is driven largely by intellectual property. If a country is not at the races, it is not going to be seen as a location for modern industry. The intention is that an advantage will be given to companies which establish real research and development activities in the country. It is not a system to avoid tax.

Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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The workers who work in these companies pay tax in the region of 30% to 35%, but, according to the US Bureau of Labor Statistics, the people who own these companies pay tax at 2% on their enormous profits. Even according to Revenue's figures, they pay an effective rate of approximately 6%. How is it fair that these multinationals pay tax at 2% or 6% when the people who clean the floors in their buildings pay tax at 20% or 30%? Why is it that the Minister is consulting these multinationals and assuring them that they will not have to pay anything more when even a small extra tax contribution from them would do away with the need to introduce water charges and to have many of the crushing austerity taxes and charges he is imposing on ordinary workers? Why is it that he will not even have a serious debate on the fairness of this and look at the effective corporation tax rate and increase it for the companies in question?

Michael Noonan (Limerick City, Fine Gael)
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As I said, I have announced that there will be a consultative process which will commence before Christmas. It is not aimed particularly at the multinationals; therefore, I invite a submission from the Deputy along the lines of what he has spoken about, if he feels like doing so. We have consultative processes for new initiatives in the Department of Finance. That is the democratic way in which we operate. I assume IBEC, IDA Ireland and the American Chamber of Commerce Ireland will make submissions. All of these organisations are very familiar with the requirements of multinational companies. However, we live in a global world and the main actors in terms of globalisation are multinational companies. The amount of revenue generated in Ireland by any of the big multinationals is quite small. The Deputy quoted American statistics, but I would not like it if the impression was given that they were based on profits generated in Ireland. They are based on profits generated worldwide. It is in the hands of the American authorities to amend their tax laws to take a greater proportion of revenue from American multinationals.