Eoghan Murphy (Dublin Bay South, Fine Gael) | Oireachtas source

I thank Senator Richmond for raising the issue and giving me the opportunity to update the House on the matter. The Minister, Deputy Noonan, and I were surprised and disappointed to learn in September that the Brazilian Federal Revenue Service had, without warning, added Ireland to Brazil's tax blacklist. The operation of the listing was initially backdated to 1 August but it was subsequently suspended until 1 October. No notice of this decision was given to the Irish Government by the Brazilian Federal Revenue Service and no explanation was received as to why Ireland has been included on the list.

Being included on the list has a number of negative consequences, including greater Brazilian taxation on flows of income from Brazil to Ireland. Since the listing was published, we have sought to engage with Brazilian revenue to seek Ireland's removal from the list. The Irish ambassador to Brazil is leading our engagement with the Brazilian Federal Revenue Service, doing a fantastic job on behalf of the Government. Officials from the Department of Finance and the Department of Foreign Affairs and Trade are in close contact with the ambassador and supporting these efforts.Senior officials from both Departments have also held meetings with the Brazilian ambassador to Ireland to express our concern with being included on the Brazilian list.

A formal request for Ireland to be removed from the Brazilian list was submitted to the Brazilian Federal Revenue Service on 27 September. The request also sought for the listing to be suspended to allow technical discussions to take place between officials. The request remained under consideration by the Brazilian Federal Revenue Service until we received a response on 17 November.

While the request was still under consideration, the Brazilian Federal Revenue Service made some changes to the operation of the listing. These changes were designed to remove the aviation sector from the scope of taxes imposed as a result of the listing. The change means that withholding tax is not included on the payment of aircraft lease rentals from Brazilian airlines to Irish aircraft leasing companies.

Unfortunately, the reply from the Brazilian Federal Revenue Service on 17 November rejected our request for the listing to be suspended. Following follow-up discussions, the Brazilian Federal Revenue Service has agreed to meet a technical delegation from the Department of Finance and the Revenue Commissioners to discuss the issue further. The Irish ambassador in Brazil is now working on scheduling a meeting as soon as possible. I was in contact with him on Friday of last week on two separate occasions discussing this issue to see what kind of timeline we can have for those meetings to go forward as quickly as possible.

The response received from the Brazilian Federal Revenue Service makes it clear that Ireland was included on the list because our statutory rate of corporation tax is below 17%, which is the benchmark set under Brazilian law. In our formal submission to Brazil we highlighted that Ireland has a 25% corporation tax rate on passive income and a 33% rate on chargeable gains. We also stressed that the 12.5% rate has been settled policy in Ireland since 2003 and that Ireland's corporation tax take has typically been very close to the EU and OECD averages, both in terms of corporate tax as a percentage of GDP and in terms of corporation tax as a percentage of total tax revenue. We believe it is inappropriate to include Ireland on a blacklist simply because we apply a low tax rate to a wide tax base, which is fully in line with recommended OECD best practice. We remain hopeful that discussions between the Brazilian Federal Revenue Service and Irish officials will enable us to fully explain our corporate tax system and, hopefully, see Ireland removed from the Brazilian list.

I should add that the response received from Brazil on 17 November makes it clear that Brazil does not consider Ireland to be a tax haven. I strongly reject allegations that we are a tax haven. Ireland does not meet any of the international standards for being considered a tax haven. Ireland is fully compliant with all international best practice in the areas of tax transparency and exchange of information. Ireland's corporate tax policies are designed to attract real and substantive operations to Ireland. Ireland has not been and will never be a brassplate location. Ireland only has and wants real substantive foreign direct investment, the kind that brings real jobs and investment.

Ireland is an active participant in global work to reform the international corporate tax system. We have implemented country-by-country reporting, agreed the anti-tax avoidance directive and are working towards the implementation of the remaining OECD base erosion and profit sharing, BEPS, recommendations both domestically and internationally. On budget day the Minister for Finance, Deputy Noonan, published an update on Ireland's international tax strategy that highlights our continuing efforts in this regard.