Róisín Shortall (Dublin North West, Independent)
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83. To ask the Minister for Finance his estimate of the amount of revenue that would be raised if the effective rate of corporation tax was 12.5%. [22881/15]

Michael Noonan (Limerick City, Fine Gael)
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In relation to the effective rate of corporation tax, the Deputy may be aware that my Department last year published a comprehensive Technical Paper on Effective rates of Corporation Tax in Ireland. This report is published on the Department's website and can be viewed at the following link:

In attempting to assess the effective corporate tax rate that is applied to the total of company profits in Ireland, the Paper concludes that the approach based on national aggregate statistics is the most suitable. Using that approach based on separate datasets from the Central Statistics Office and the Revenue Commissioners, the Report found that since 2003 the effective corporate tax rate has averaged 10.9% and 10.7% respectively with the two datasets.

It is not possible to accurately cost the proposal to increase the effective rate to 12.5%.  While the effective rate is lower than the 12.5% headline rate, this can be attributed to the availability of double taxation relief and a small number of corporate tax incentives such as the Research and Development Tax Credit and the Tax Relief for New Start-Up Companies for example.

On the issue generally, some countries have a high headline rate of corporation which is then supplemented by a high number of tax reliefs which reduce the overall rate of tax paid.  By contrast, the approach in Ireland is transparent: we have a competitive headline rate of corporation tax which is applied to a broad base.

We therefore only have a small number of tax incentives in Ireland, and we make sure that those we do have are specifically targeted.  They are focussed:

- firstly on the creation of additional employment as is consistent with current government policy; and

- secondly on areas of innovation with a view to generating high value-added economic activity in the country.

We make sure that we review the few incentives that we have on a regular basis to ensure value for money for the Irish taxpayer.  An example of this is the review of the R&D tax credit which took place in 2013.  This review found that the tax credit meets these objectives, and is important for supporting jobs and innovation in Ireland.

In order to ensure the proper evaluation of such reliefs on an on-going basis, the Department of Finance developed and published new guidelines for the Evaluation of Tax Expenditures which can be viewed at the following link: