Paul Murphy (Dublin South West, RISE)
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113. To ask the Minister for Finance if he agrees with the chief IMF representative to Ireland during the Troika bailout, Ashok Mody, that Ireland is a "well-established tax haven" and that "for much of the world, Ireland is regarded as a corporate tax haven" (details supplied); if not, what alternative explanation he would provide for the recent boom in corporate tax revenue; and if he will make a statement on the matter. [30163/23]

Michael McGrath (Cork South Central, Fianna Fail)
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Ireland’s corporate tax policy, and broader industrial strategy, has consistently focused on attracting real and substantive investment that brings jobs. Measured by any objective international criterion, Ireland cannot be defined as a tax haven.

Our competitive but fair corporation tax rate is just one part of the Ireland's offering which is complemented by our highly educated young and English speaking workforce, along with a common law legal system and stable political environment making Ireland an attractive EU base for businesses. Ireland also utilises its strong history and network with the USA in attracting American businesses, which has proven successful over many decades now.

This success is evidenced by the substantial number of Multi-National Enterprises (MNEs) who have chosen Ireland as their home and the hundreds of thousands of both direct and indirect jobs they contribute to the economy.

I believe that small countries, and Ireland is one of them, need to be able to use tax policy as a legitimate lever to compensate for advantages of scale, location, resources, industrial heritage and the real, material and persistent advantage enjoyed by larger countries.

Ireland continues to take action to ensure the Irish tax code is in line with new and emerging international tax standards as agreed globally. The Update to Ireland’s Corporation Tax Roadmap, published in January 2021, highlights all of the actions that have been taken, and that will continue to be taken, by Ireland on corporation tax reform.

It is important to acknowledge the reforms we have undertaken and the positive role we continue to play at OECD and EU, and that today we have far more robust international tax rules and safeguards to prevent abuse, arbitrage, base erosion and profit shifting than existed a decade ago.

Ireland has in recent Finance Acts: fully completed the transposition of the Anti-Tax Avoidance Directives (ATAD); introduced legislative defensive measures against EU list of non-cooperative jurisdictions for tax purposes through enhanced Controlled Foreign Company Rules; updated transfer pricing rules; and introduced legislation for BEPS measures on mandatory disclosure rules.

This work continues at pace and legislation will be brought forward to transpose the EU Minimum Tax Directive and further defensive measures to apply to outbound payments as part of Finance Bill 2023.

Marc Ó Cathasaigh (Waterford, Green Party)
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114. To ask the Minister for Finance if he will consider a reduction in VAT to zero on heat pumps, similar to the treatment of VAT on solar panels; and if he will make a statement on the matter. [29886/23]

Michael McGrath (Cork South Central, Fianna Fail)
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As previously noted to the Deputy, under the EU VAT Directive it is not possible to reduce the VAT on heat pumps to zero. However, following changes agreed last year in Annex III of the aforementioned Directive, there is scope to reduce the VAT rate in highly efficient low emissions heating systems to a reduced VAT rate. In Ireland that would mean a rate of 9% or 13.5%.

However, these systems have to comply with very specific technical requirements, meeting the emission benchmarks laid down in Annex V of Commission Regulation (EU) 2015/1189 and in Annex V of Commission Regulation (EU) 2015/1185 respectively and also have to be attributed an EU energy label to show that the criterion referred to in Article 7(2) of Regulation (EU) 2017/1369 is met.

Changes in VAT rates are considered as part of the normal annual Budget and Finance Bill process. It should be noted that while heat pumps have the standard rate of VAT applied they have an effective rate of 13.5% VAT due to the 'two-thirds rule' which applies to construction. This rule means that if the cost of the goods used in carrying out work does not exceed two-thirds of the total price, the rate which applies to the service then applies to the entire transaction.