Eamon Ryan (Dublin South, Green Party)
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Question 301: To ask the Minister for Finance if there is a system of monitoring within his Department to assess the performance of companies participating in the business expansion scheme. [8563/07]

Eamon Ryan (Dublin South, Green Party)
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Question 303: To ask the Minister for Finance the methodology used for the 2006 survey of the business expansion scheme and seed capital scheme; the response rate for the survey; the factors assessed in the survey; and his views on whether the survey provides a sufficiently representative and informed assessment on which to determine the expansion of BES. [8567/07]

Brian Cowen (Laois-Offaly, Fianna Fail)
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I propose to take Questions Nos. 301 and 303 together.

My decision to extend the Business Expansion Scheme (BES) and the Seed Capital Scheme (SCS) was based on a thorough review of the scheme that was carried out by my Department during Summer 2006 in conjunction with the Department of Enterprise, Trade & Employment and the Revenue Commissioners. It included a survey of firms which had benefited from the BES. The 2006 Review has been published on my Department's website at http://www.finance.gov.ie/documents/publications/Reports/BESSCSReport.pdf. The 2006 Review took account of the findings of the Report of the Small Business Forum, Small Business is Big Business, the Survey of SME Finance/Equity carried out by Forfás, and the PWC Report Strategic Advisory Services — Enterprise Ireland Seed and Venture Capital Funds Programme 2006, as well as a range of submissions from interested parties. In addition, the extension of the scheme was considered by the Tax Strategy Group in the context of Budget 2007.

On the basis of all of this I concluded that there was a strong case for extending the schemes given the clear market failure in providing equity capital for small firms in their start up and early development phase, the evidence of how vital the schemes have been in the past for such firms and the continuing needs in this regard, the potential return to the economy from indigenous Irish companies, and the clear support for continuation from a large number of representative and other bodies in the public and private sector.

Both the BES and SCS have been the subject of regular review and monitoring by my Department as well as the Department of Enterprise, Trade and Employment and the relevant development agencies since the schemes were first introduced, as is detailed in the 2006 Review. Each time, the main conclusion has been the same — a significant market failure exists due to the high risk associated with start-up business and this results in persistent difficulties in securing early stage capital; this market failure justifies continuing fiscal support.

The information the Deputy requests on the methodology used, the response rate and the factors assessed in the survey, together with the performance of companies participating in the scheme, is all contained in the above-mentioned review.

Eamon Ryan (Dublin South, Green Party)
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Question 302: To ask the Minister for Finance if, in view of recent research findings that companies may be laundering profits through Ireland to avoid American tax, there are difficulties in the way multinational companies declare their profits here; and the role the agencies under his aegis have in preventing same. [8564/07]

Brian Cowen (Laois-Offaly, Fianna Fail)
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I am not aware of any difficulties with the way that companies declare their profits for Irish tax purposes. The structure of the Irish tax regime corresponds to the international norm. A company that is resident in the State is taxed on its worldwide income. A company that is not resident in the State but which carries on a trade through a branch or agency in the State is taxed on its trading income arising through or from that branch or agency and any income from property or rights used by, or held by, the branch or agency. Returns of profits made in an accounting period by a company that is within the charge to tax here are required to be made to the Revenue Commissioners within 9 months after the end of the accounting period.

The Irish tax regime applies a 12.5% corporation tax rate to trading income generally. A wide base is used in calculating the trading income concerned. This rate applies both to companies that are resident in the State and to those that carry on a trade here through a branch or agency. This is an up-front transparent regime.

Locating in Ireland does not protect a multinational group from taxation in its "home" country. Where a subsidiary located in Ireland pays a dividend to its foreign parent company, the parent company will be taxed on the dividend but will be entitled to a credit against the tax on the dividend for any Irish tax paid on the profits out of which the dividend is paid. The US and other parent company jurisdictions have sophisticated rules to prevent their companies from availing of tax deferral in low tax jurisdictions where this is not considered appropriate, such as in the case of passive income. Such deferral is only possible for genuine business activities.