Michael Colreavy (Sligo-North Leitrim, Sinn Fein)
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11. To ask the Minister for Finance his plans to ensure all companies incorporated in Ireland but not tax resident anywhere pay corporation tax here. [41514/13]

Michael Noonan (Limerick City, Fine Gael)
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All companies that are tax resident in Ireland are chargeable to corporation tax at the 12.5% rate on the profits that are generated from their trading activities in Ireland. A higher 25% rate applies in respect of investment, rental and other non-trading profits. Chargeable capital gains are taxable at the capital gains tax rate of 33%. Companies that are not tax resident in Ireland and which do not carry on a trade in Ireland have no liability to Irish corporation tax and have no obligation to file an Irish corporation tax return. However, a company that is not tax resident in Ireland will be liable to Irish corporation tax tax, if they carry on a trade through a branch or agency in Ireland, in respect of the profits arising to the branch or agency.

Specifically in relation to the Deputy’s question, I think it is important to be clear that an Irish incorporated company, that is not tax resident anywhere, is taxable in Ireland in respect of any profits that accrue to that company from activities or operations that take place in Ireland under the existing rules that I have just described. The ability of a company to be tax resident nowhere appears to be the result of mismatches between the domestic rules of different countries with regard to determining the place of tax residence of a company. Some countries, such as Ireland, rely primarily on the use of a management and control test to determine whether or not a company is tax resident in Ireland. Some other countries rely primarily on an incorporation test to determine place of tax residence.

Such mismatches can be exploited by companies to allow them to be tax resident nowhere. The most effective way to deal with such arrangements is for countries to work together to examine these structures and to consider how international rules can be amended to ensure fair levels of taxation. Ireland remains fully committed to this approach to ensure coherence in international taxation. In this regard, Ireland is participating in projects at EU and OECD level which aim to address international tax issues.