Denis Naughten (Roscommon-Galway, Independent)
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119. To ask the Minister for Finance the steps he plans to take to stop the use of the Irish taxation system for tax avoidance purposes by companies that source their income from international activities that undermine both the Government public health policy and climate policy and the divestment actions of the Ireland Strategic Investment Fund in tobacco companies and fossil fuel companies; and if he will make a statement on the matter. [14521/21]

Paschal Donohoe (Dublin Central, Fine Gael)
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I recall that the Deputy and I discussed this issue during at the Committee and Report Stages of Finance Bill 2020, where I explained that aggressive tax planning by multinational companies is a global problem that requires countries to work together to find an effective global solution.

Ireland is actively participating in the on-going discussions at the OECD to reform the international tax landscape, which seek to address the tax challenges of digitalisation. In addition, we continue to work with our fellow EU Member States, and have agreed and implemented an unprecedented number of Directives on tax cooperation in recent years which have been highly successful in addressing aggressive tax planning.

At the domestic level, a succession of significant measures have been introduced in recent years on Corporation Tax, and this work continues. Budget 2021 contained revisions to Ireland’s capital allowances for intellectual property in order to ensure such assets are fully within balancing charge rules in line with international best practice for such reliefs in other jurisdictions. Finance Act 2020 introduced certain legislative defensive measures which provide that Ireland’s Controlled Foreign Company rules apply more strictly to companies with subsidiaries operating in jurisdictions that remain on the EU list of non-cooperative tax jurisdictions.

It is worth re-iterating that aggressive tax planning arrangements are not designed by Governments but by advisers, lawyers and business devising complex plans to exploit mismatches or gaps in legislation including between different jurisdictions. Where instances of aggressive tax avoidance emerge, Revenue will rigorously investigate and challenge such cases through the various anti-avoidance legislative provisions available to them.

The Deputy will be aware that, in January, I published an update to the Corporation Tax Roadmap. This update takes stock of the significant actions we have taken to date, reflects on the global tax reform work at the OECD at what is a crucial moment, and sets out the next steps in the ongoing process of modernising and further strengthening our corporation tax system, to ensure it continues to meet the needs of the modern economy.

I have considered the Deputy’s request, but I believe that the systematic approach we are taking is the best way of continuing to ensure that all companies pay the appropriate level of tax, and ensure that the tax system meets the needs of the modern economy.