Brian Hayes (Dublin South West, Fine Gael) | Oireachtas source

This is a very interesting discussion. On the general issue, taking account of Senator Barrett's point, we must work together with other counties to make sure this practice is stamped out. No one country on its own can deal with this issue. We will work with our EU partners, even during our Presidency, on initiatives which are already in the field. For instance, the base erosion and profit sharing initiative is something we at an EU level want to get over the line and to agree is an important file, but whether its completion occurs during the time of our Presidency is another matter.

It is worth saying that we have a very transparent corporation tax rate. Our effective rate is within half a point or sightly more of the full 12.5% and that is not the case in other countries. What one sees is what one gets in Ireland. One pays the tax, it is straightforward and it is across the board. Admittedly, there are some write-offs, particularly in areas such as research and development, which has the benefit of making sure that activity is enhanced and supported in the country. The central point is that this is not a blank sheet of paper in the circumstances that one has to work with other countries, particularly in terms of rooting out avoidance. This is an issue where companies use different tax codes for the purposes of minimising their tax liability in one country or another.

The Minister, Deputy Noonan, is on record in that respect, particularly regarding the work of the OECD, with which we have worked very closely. The entire agenda of the OECD in recent years has been based on this very issue, namely, the way countries make it absolutely clear to the international community that through measures such as double taxation and other agreements it can show that a fair and proportionate amount of tax is being taken in the area of corporation tax. It is worth saying that the corporation tax rate, in terms of the yield, is approximately ¤4 billion. At the height of the boom it was approximately ¤7 billion. That shows the degree to which economic activity has reduced in recent years.

The stated position of the Irish Government and the Department of Finance is to work with other countries and if other countries or groups of countries put forward a proposal to us, we will consider it in due course. I note that in the Chancellor of the Exchequer's statement to the British Parliament the other day he is now proposing to reduce corporation tax rates in the UK to 20% over a period of years. The net issue here is that taxation is still the preserve of the 27 member states. I want to be frank and honest with colleagues. I have attended some of the ECOFIN meetings and there are divisions in Europe as to how we go forward and that was seen in the FDT debate on financial services transaction tax. There will always be a competitive advantage from one country to the next. What we need to do is to minimise the avoidance and I fully agree with the Senator's remarks on this. This issue is not specific to section 91, I hasten to add, but this was an interesting debate nonetheless.