Written answers

Thursday, 13 March 2014

Photo of Terence FlanaganTerence Flanagan (Dublin North East, Independent)
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62. To ask the Minister for Finance the position regarding the corporation tax of a company (details supplied); and if he will make a statement on the matter. [12720/14]

Photo of Terence FlanaganTerence Flanagan (Dublin North East, Independent)
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63. To ask the Minister for Finance his views on media reports regarding a company (details supplied) paying €36 million tax on €7.11 billion profits at its Irish unit and avoiding paying more than €850 million in tax here between 2004 and 2008; and if he will make a statement on the matter. [12736/14]

Photo of Michael NoonanMichael Noonan (Limerick City, Fine Gael)
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I propose to take Questions Nos. 62 and 63 together.

I am precluded from discussing the tax affairs of any particular individual or company. However, I am aware of recent media reports which refer to the ways that some companies structure their international tax affairs to minimise their tax costs, and the fact that some of these reports make reference to Irish companies being part of these structures.  I understand that some of these reports have suggested that some companies in multinational groups pay Irish corporation tax at rates that are significantly lower than 12.5%. It is important to state clearly that such companies are not paying a low rate of Irish tax.  All companies operating in Ireland, whether they are domestic businesses or multinationals, are chargeable to corporation tax at the 12.5% rate on the profits that are generated from their trading activities here. A higher 25% rate applies in respect of investment, rental and other non-trading profits, as well as certain petroleum, mining and land-dealing activities, and chargeable capital gains are taxable at the capital gains tax rate of 33%.

The reports concerned appear to have incorrectly attributed to Ireland profits that represent the return due to assets, owned by group companies that are not resident in Ireland. It is incorrect to relate the 12.5% corporation tax rate to both the profits of the Irish-resident group companies and the profits of non-resident group companies which are not profits chargeable to Irish corporation tax.  By mixing up the Irish profits and the foreign profits of multinational groups like this, these reports can produce an average tax rate for the companies concerned that is lower than 12.5% and an incorrect inference that the full Irish profits are not being charged.

From an Irish perspective, we ensure that the profits arising in Ireland are taxed at our 12.5% rate of corporation tax.  We do not seek to charge profits properly attributable to other jurisdictions. The ability of entities to lower their world-wide rate of tax using international structures reflects the global context in which Ireland and indeed all countries operate.  Differences arise in the legal and tax systems between countries.  International tax-planning takes account of these differences in national systems and rules.  The best way to combat 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.

The appropriate action is being considered in this regard by the OECD as part of their project on Base Erosion and Profit Shifting and Ireland is participating fully in this process. To demonstrate our commitments in this regard, on Budget Day last year, I published Ireland's International Tax Strategy, which can be viewed on the Department's website.  This document sets out our commitments in relation to international tax and highlights our strong support for global action to address harmful tax competition.  Ireland is very active in international fora that deal with these issues, such as the OECD's Forum on Harmful Tax Practices and the EU Code of Conduct Group. Ireland wants to be part of the solution to this global tax challenge, not part of the problem.  That is why I introduced a change last year in Finance (No. 2) Act 2013 which amended  Ireland's company tax residence rules to ensure that an Irish-registered company cannot be 'stateless' in terms of its tax residency.

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