Bernard Durkan (Kildare North, Fine Gael)
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69. To ask the Minister for Finance if the attention of his European colleagues has been drawn to the importance of Ireland's 12.5% corporation tax, which appears to have suddenly become the target for commentators at home and abroad; if adequate cognisance continues to be taken of the isolated geographical location of the economy in the context of access to the centre of Europe; and if he will make a statement on the matter. [6644/17]

Michael Noonan (Limerick City, Fine Gael)
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At 12.5%, Ireland has one of the most competitive and stable headline corporate tax rates in the OECD.  Our competitive rate of corporation tax has been an important part of our industrial policy since the 1950s, and has attracted real and substantive operations to Ireland since then.

A competitive corporate tax rate is a tool to address the economic limitations that come with being a peripheral country, as compared to larger core countries. Ireland s 12.5% corporation tax rate plays an important role in attracting foreign direct investment ( FDI ) to Ireland and thereby increasing employment here.  

In a recent research paper 'Corporate Taxation and Foreign Direct Investment in EU Countries: Policy Implications for Ireland', the Economic and Social Research Institute ( ESRI ) outlined the importance of the 12.5% rate in attracting FDI. The paper demonstrates that amongst all EU countries, Ireland would be the most sensitive to a change in the corporate tax rate in its ability to secure FDI. An increase in Ireland s statutory corporate tax rate of 1% would be associated with a reduction in its probability of being chosen as a location for FDI projects from non-EU countries by 4.6%.

Furthermore, in October 2015 the OECD published the final reports on their project regarding Base Erosion and Profit Shifiting or BEPS.  I welcomed the publication of the final BEPS reports.  From the beginning, the key aim of the BEPS project has been to better align the right to tax with real economic substance and activity and, as such, the BEPS project is one which aligns with Ireland's own tax strategy.  Ireland has been a strong supporter of the BEPS project and I believe it is the best approach for dealing with aggressive tax planning. Ireland will now play an active part in the work to implement the BEPS recommendations globally.  The post-BEPS environment, which will see companies seek to better align the amount of tax that they pay with their substantive operations, will result in opportunities for Ireland.  The alignment of substance with a competitive rate of tax has long been the cornerstone of our corporation tax policy. 

The ongoing commitment to the 12.5% rate, as stated in the Programme for a Partnership Government, is extremely important for Ireland s economy.   I believe that Ireland's long-term commitment to the 12.5% rate will ensure that we remain highly competitive and will support Ireland's ability to attract and retain investment from around the world.  Our European colleagues are fully aware of our position in relation to this issue.