Select Committee on Finance, Public Expenditure and Reform, and Taoiseach debate -
Thursday, 20 Sep 2018

Taxation Agreements: Motions

Minister of State at the Department of Finance (Deputy Michael D'Arcy)

Each September, the various double taxation agreements that Ireland has signed in the prior year are presented before this committee as part of the process of ratification. This year we are seeking to ratify a particularly important international agreement that seeks to modify the application of existing double tax agreements to ensure that they are robust and in line with evolving Organisation for Economic Co-operation and Development, OECD, base erosion and profit-shifting, BEPS, best practice. In this regard, I am pleased to bring before the committee on behalf of the Minister of Finance, Deputy Donohoe, a draft Government order as part of the ratification process for the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting. In addition, I am presenting to the committee a draft order to implement a new double taxation relief agreement with the Republic of Ghana.

Earlier this month, the Minister published Ireland's corporation tax roadmap, which takes stock of the changing international tax environment, outlines the actions we have taken to date and the additional actions that will be taken in the coming months and years. Among those actions is our commitment to implement the OECD's BEPS recommendations and the other international agreements into which we have entered. The BEPS multilateral convention seeks to implement all of the BEPS recommendations that relate to bilateral double tax agreements. Ireland has 74 double taxation agreements in place at present. With the exception of this agreement with Ghana, they are currently in effect. Our double taxation agreement network is an important aspect of our competitiveness in attracting investment and facilitating Irish business in operating internationally. In addition, double tax agreements are a cornerstone of Ireland's trade policy and are a key element in stimulating trade and investment flows between countries. The benefits of double taxation agreements are well known. They facilitate trade and investment, provide greater predictability and fairness for taxpayers regarding their tax obligations in foreign jurisdictions and they are key to the prevention of double taxation.

As part of the OECD's BEPS process, concerns were identified as to how double taxation agreements could potentially facilitate double non-taxation. The BEPS recommendations that were published in October 2015 include a number of recommendations for amendments. The double tax agreements ensure that they cannot be used for aggressive tax planning arrangements. There are approximately 3,000 double tax agreements in existence worldwide. It was acknowledged as part of the BEPS initiative that it would be impractical to update all of those double tax agreements through bilateral negotiations. It was agreed that a multilateral convention would provide the most appropriate and timely methods for countries to update their existing double tax agreements. In November 2016, over 100 jurisdictions concluded negotiations on the BEPS multilateral convention. Ireland was among the first signatures of this important international agreement in a ceremony in Paris in June 2017. Upon coming into force, it is expected that the majority of Ireland's double tax agreements will be modified by the BEPS multilateral convention, with the exception of those countries with which we have agreed to update our agreement bilaterally. Our existing double tax agreements with the Netherlands, Switzerland and Germany will be updated bilaterally, and some other jurisdictions with which we have double taxation agreements may request a similar approach because of restrictions in their own domestic law. As for those partner countries that have not yet signed the BEPS multilateral convention, Ireland has written to them to discuss options for implementing the BEPS recommendations. We are committed to ensuring all of our treaties meet the minimum standards agreed in the BEPS process.

In adopting the BEPS multilateral convention countries have choices as to which BEPS measures to adopt. As an active contributor to the BEPS initiative, it is proposed that Ireland will adopt the majority of the choices contained in the multilateral convention. While some of the articles are minimum standards and thus compulsory for all signatories, Ireland has also chosen to adopt a number of additional optional best practice measures. The approach that Ireland is taking to the various options is the same as the provisional approach published when the convention was signed last year. The key provision in the convention is for countries to include a general anti-avoidance clause in their tax treaties. Ireland proposes to select a principal purposes test, which requires activity to be in a country for legitimate purposes in order to access the benefits of the country's tax treaties. It is expected that all countries signing up to the BEPS multilateral convention will select this provision.

Ireland is also opting to allow for double taxation agreement disputes to be subject to binding arbitration where tax authorities cannot reach agreement. This will be welcomed by businesses as it should minimise the cases where double taxation arises. Most of the options in the convention which Ireland is not proposing to adopt are primarily technical in nature and not relevant to Ireland's tax systems.

I would draw the committee's attention, in particular, to the position in respect of permanent establishment rules which were dealt with by Articles 12 to 15, inclusive, of the multilateral convention. The permanent establishment test determines how much activity a company must have in a country before it must pay corporation tax. Ireland will opt in to the new anti-avoidance rules in Articles 13 to 15, inclusive, to stop businesses engaging in artificial behaviour to avoid having a taxable presence in a country.

However, Ireland will reserve its position in respect of Article 12 of the multilateral convention. Article 12 operates a new test for permanent establishment when a company is operating in a country through an agent. We believe there is not yet sufficient certainty as to how the new rules in Article 12 would be interpreted and applied and our caution is shared by a majority of countries which have signed the multilateral convention. This caution is reflected by the fact that it is expected that only 17% of the double tax agreements that are amended by the multilateral convention will include Article 12. We are committed to keeping the position under review, however, as it would be possible for Ireland to opt in to this article at a later date post ratification subject to governmental approval and Dáil Éireann approval should sufficient clarity be reached to its operation. It would also be possible to include this article in double taxation agreements bilaterally should a treaty partner seek to include it in future negotiations and make a strong case in negotiations.

Today, the committee's approval is also sought for an order as part of the ratification of a double taxation agreement with Ghana. In 2012, officials from the Ministry of Foreign Affairs of the Republic of Ghana raised with the Department of Foreign Affairs and Trade the possibility of negotiating a double tax agreement with Ireland. Negotiations on the double taxation agreement with the Republic of Ghana, which started in 2014, were successfully concluded in 2016.

Ireland's bilateral trade with Ghana continues to grow. For example, in 2016, Ireland's merchandised trade with Ghana was worth €43.4 million. Ghana is the sixth largest market in Africa for Irish food and drink exports. A number of companies, such as Guinness, Tullow Oil and ESB International operate there. The double tax agreement will help to deepen our economic links with Ghana, which is forecast to be among the world's fastest growing economies in 2018.

The double taxation agreement with Ghana is comprehensive in scope and generally follows the OECD and UN model conventions. It is worth noting that this double taxation agreement contains a number of provisions from the UN model convention that benefit Ghana as a developing country. For example, Ireland agreed to the inclusion of the imposition of withholding tax on technical fees as a UN model provision at the request of Ghana even though it is not normally part of our double taxation agreement policy. In addition, to encourage the development of education in Ghana, there is a two-year tax exemption for teachers, professors and researchers who work in universities, research institutes or other higher education establishments in Ghana.

If Dáil Éireann approves the taking of these orders, the Minister for Finance will include the orders in the Taxes Consolidation Act 1997 by way of an amendment in the upcoming finance Bill. This will enable Ireland to complete the necessary notifications to finalise the ratifications on both agreements.

I commend these draft orders to the committee. If required, I will be happy to answer whatever questions members may have.

Deputy Barry Cowen

I have a series of questions to put to the Minister of State on foot of his recommendation to the committee. Why does the new Ireland-Ghana tax treaty contain none of the provisions against treaty abuse agreed in 2015 by the OECD member states, including Ireland, which Ireland has committed to implementing?

In 2017, the finance ministry promised that Ireland would invite tax treaty partners that have not signed the OECD multilateral instrument to introduce anti-abuse measures unilaterally in their tax treaties with Ireland. Did the Government make such an offer to Ghana? If so, why did Ghana decline this offer? If not, why?

What assessment has the Department or Revenue made on the likely spillover effects of the new Ireland-Ghana tax treaty on Ghana's taxing rights and tax revenues in line with the 2015 spillover exercise?

Was the most favoured nation clause in the protocol to the treaty committing Ghana to lowering withholding tax rates for Ireland to match any subsequent rate reductions agreed with future treaty partners included at Ireland's or Ghana's request?

Why does the treaty not permit Ghana to tax capital gains from sales of shares in Irish holding companies deriving their value from moveable assets in Ghana as both the UN tax committee and the IMF have recommended?

Ministers have told the Oireachtas that double tax treaties are beneficial to all sides because they facilitate trade and investment, and yet internal papers that Irish officials prepared in 2012 for cross-Government discussions of the Ghana and Botswana tax treaty negotiations released recently under the freedom of information, FOI, laws admit that when treaties are concluded with developing countries, there is little clear evidence about whether tax treaties boost investment at all, stating that recent empirical literature has been inconclusive in estimating the effect of double tax agreements on the foreign direct investment, FDI, of developing countries. What does the Government think about this contradiction? Will the Minister of State inform us on that point.

Those same internal Government papers also state that tax treaties based on the OECD model which Ireland favours cause capital flows from developing to developed nations and that such treaties allow taxpayers to channel money between jurisdictions to minimise tax payable, particularly if withholding taxes are minimised to encourage investment, a practice which would clearly not be encouraged in relation to developing nations, and yet the new Ireland-Ghana halves Ghanaian withholding taxes on technical service fees and royalties. Why were these international development concerns apparently ignored during the treaty negotiations?

Deputy Michael D'Arcy

The treaties are bilaterally agreed between two countries negotiating on equal footing. We seek to find the best deal that works for both parties and that has been consistent over the 74 tax treaties that we have to date. Each country is best placed to decide whether a treaty makes sense for it and what works best in its interest in a treaty.

Negotiations on the double taxation agreement with Ghana concluded before Ireland or Ghana's policy positions on measures contained in the multilateral convention had been finalised. As I stated, this started in 2014 and concluded in 2016. As a result, the signed double taxation agreement does not have the anti-base erosion and profit shifting, BEPS, measures contained in the multilateral convention. Ghana had not yet signed the multilateral convention. If it signs and ratifies it, the multilateral convention will modify the application of the existing double taxation agreement to bring it in line with the BEPS standards without any further action from Ireland being necessary. In addition, Ireland has contacted Ghana's competent authorities proposing a bilateral protocol to the double taxation agreement in case that is Ghana's preferred way to implement the anti-BEPS measures. If Ghana does not implement the multilateral convention, it can be done bilaterally between Ireland and Ghana.

All options are discussed and the final agreed treaty will have more or less the same UN-type provisions depending on what has been proposed by Ireland's treaty partners and the overall balance of the treaty itself. This may explain why treaties concluded with developing countries and within the same broad timescale often vary in the amount and type of UN provisions contained therein. A related factor is the treaty policy in the partner country. For example, Ireland's treaty with Ethiopia, which was ratified in the Finance Act 2015, includes a provision on tax sparing which is a general feature of Ethiopia's tax treaty base and something that is found in most of that country's treaties, whereas a treaty with another developing country, Botswana, ratified in the previous year did not have a tax sparing provision. The treaty with Ghana before the committee today does not contain this provision either.

It is similar to Botswana but it is different from Ethiopia. I am trying to go through these as best I can for the Deputy. He has put a fairly substantial number of questions to me.

As to the Department's revenue spillover in 2015, there was a spillover analysis concluded in relation to this treaty, which was carried out before the treaty. The Department and the Revenue Commissioners were satisfied that there was not a significant spillover in relation to that. In the negotiations between both countries, there was not a request for favoured nation status. Both parties were satisfied to put it in as a favoured nation.

Deputy Barry Cowen

Was it an oral request?

Deputy Michael D'Arcy

The Deputy had a question about capital gains. Could he ask it again please?

Deputy Barry Cowen

Why does the treaty not permit Ghana to tax capital gains from sales of shares in Irish holding companies deriving their value from movable assets in Ghana, as the UN tax committee and IMF have both recommended? In other words, if the UN and IMF have recommended that be the case, why is it not included, or referred to in this treaty?

Deputy Michael D'Arcy

That request was not made, and on that basis, we did not implement it. The request was not made by Ghana in relation to the capital gains. It is a standard clause and it was accepted by both parties. When it did not request it, it was not presented.

Deputy Barry Cowen

It will not be taxing capital gains from sales of shares in Irish holding companies deriving their value from movable assets in Ghana.

Deputy Michael D'Arcy

That is correct.

Deputy Barry Cowen

This is despite that being a recommendation of the UN tax committee and the IMF.

Deputy Michael D'Arcy

It was not requested by Ghana.

Deputy Barry Cowen

Were we not aware of that fact?

Deputy Michael D'Arcy

It was not requested, so we did not progress it. Double taxation agreements benefit trade and investment. This is our 74th agreement. There are 3,000 in total between countries. If one looks at our EU partners, Germany has more than 100 while the UK has 130 double taxation agreements. Double taxation of companies is not a good thing. It damages business and the objective is to try to encourage business between countries and give companies opportunities to go to a country, trade and have a double taxation agreement so that it is able to pay tax in a single jurisdiction if it chooses to do so, meeting of course, the requirements of the double taxation treaty. I am satisfied that the double taxation treaties are good. They benefit developing countries, and they benefit companies which have the opportunity, and which choose to enter those jurisdictions and participate.

Nobody forces a country into doing a tax treaty with Ireland. Ghana approached Ireland in relation to this. Ireland's treaties with developing countries generally include provisions based on the UN model treaty, which is designed for the developing countries. This can be seen from double taxation agreement, DTA, that is before the committee today. From a developing country's perspective, our DTA with Ghana is fair and allows for withholding tax on royalties and technical fees in accordance with the UN model, which it requested.

What was the Deputy's question about the OECD model in relation to capital flows?

Deputy Barry Cowen

This new treaty halves Ghanaian withholding taxes on technical services fees and royalties. Why were these international development concerns apparently ignored in the treaty negotiations? Again, it is similar to the previous question in relation to capital gains. It is almost as if one does not have to give the answer, if the question is not asked.

Deputy Michael D'Arcy

In relation to most double taxation agreement treaties, most of them would not facilitate withholding taxes or technical fees, whereas Ghana requested this to be implemented. We agreed to it and felt it was appropriate.

Deputy Barry Cowen

Does this not contradict other agreements with the UN and the IMF that we are privy or party to?

Deputy Michael D'Arcy

No, I do not believe so.

Deputy Barry Cowen

It is the case.

Deputy Michael D'Arcy

It does not.

Deputy Barry Cowen

In relation to the first question on base erosion and profit shifting, BEPS, the Minister said that the negotiations pre-dated the subsequent agreement-----

Deputy Michael D'Arcy

We are doing-----

Deputy Michael D'Arcy

-----but the Minister is in the midst of the two dates. Did we not sign up to it, in 2015, for example? Now we are waiting to see. If it signs, the Minister will then modify it. Could the Minister not have sought that it insist on this?

Deputy Michael D'Arcy

We have 74 of these agreements.

Deputy Barry Cowen

I am talking about this one.

Deputy Michael D'Arcy

To date, only nine countries have concluded the-----

Deputy Barry Cowen

Have we ratified our agreements with the other eight, if there is eight of 74?

Deputy Michael D'Arcy

That depends on when they passed their legislation through their Houses-----

Deputy Barry Cowen

The Minister is saying that there are 74 of these agreements and only nine of them are with countries which have signed up to this. That does not include Ghana. I am asking about the previous eight. If they were subsequently signed, did we modify the agreements?

Deputy Michael D'Arcy

There are about 100 countries that have signalled that they will take this multi-lateral convention. We are satisfied that if countries do not sign up to the multi-lateral convention, we will deal with them on a bilateral basis. It would be better, and much more facilitating for everybody, if the multi-lateral convention was passed as legislation. That would automatically update the double taxation agreements.

Only nine have concluded. We hope that this will become ten, soon. On that basis we are contacting those countries where we have a double taxation agreement which facilitates the new multi-lateral convention.

Deputy Barry Cowen

Is the Minister saying - I am not getting away from this agreement - that in the previous eight, we contacted them-----

Deputy Michael D'Arcy

No. I am saying that we will contact those other countries that have not passed the multi-lateral convention because this is an important part of the OECD, and an important part of the BEPS anti-avoidance of aggressive tax-planning by companies measure. This is a method with which to deal with it. Nobody wants that. The era of aggressive tax-planning internationally is coming to an end. Ireland has been on the record for quite some time that we believe it should be dealt with through the OECD process, through the BEPS process, and this is a really important aspect of it. We cannot force any country to pass this multi-lateral convention. We can pass ours. Then, if countries are not minded to conclude the multi-lateral convention then we will go back to them individually to try to ensure that we do a bilateral agreement.

Deputy Barry Cowen

I agree with the concept. I agree with striking agreements with these emerging nations. We must remember that there is still some aid being directed towards Ghana. One in five children in Ghana still does not survive. There are still pressing issues from a humanitarian perspective. We just want to ensure that we play our part in bringing them in line with various agreements, especially UN and IMF ones, in relation to these issues. I just need clarification from the Minister that during the course of the negotiations, despite the fact our signing of that pre-dated this agreement, this issue was raised, that there is a commitment on the part of Ghana to commit to this and that there is an acknowledgement that the agreement will be modified as soon as it does.

Deputy Michael D'Arcy

We are satisfied that we have made that contact and made those connections.

Deputy Barry Cowen

Perhaps we might get some of those other responses in writing, if that is okay.

Deputy Eoin Ó Broin

While it is clear that the motion regarding the multilateral BEPS convention represents some progress, I am concerned about certain issues. I am always wary when a Minister or Minister of State tells me not to worry about things because they are rather technical. In this case, we are being told that the opt-out from Article 12 and the choice of option B in Article 13 are not too much to worry about. From my reading of them, they are more than just technicalities. I do not know as much about this subject as the Minister of State does, but it seems to me that the measures in question will allow companies to avoid permanent establishment status artificially, or facilitate them in so doing, which is one of the biggest problems in this area. In light of the presence of the opt-out and the option I have mentioned, my party is of the view that this proposal requires much greater scrutiny. We would much prefer an open Dáil debate about these elements of the matter. I ask the Minister of State to consider that.

The taxation agreement with Ghana could end up sounding terribly technical and inconsequential, so it is important to take a step back and remind ourselves why the questions that have been asked by Deputy Cowen are so important. For every €1 in international overseas development aid that is given to countries in the developing world, approximately €2 is lost as a result of corporate tax avoidance. These bilateral tax agreements are crucial not only for our own tax affairs and the interests of companies operating here, but also as we reflect on whether we are meeting our obligations to countries in the developing world and whether we are ensuring companies are not abusing tax rules to deny countries like Ghana the vital revenues they need to tackle some of the issues raised by Deputy Cowen.

A range of non-governmental organisations, including Christian Aid and Concern, have continually said that we have a responsibility in this area. They have reminded us that if we enter into these negotiations without having an eye to the needs of countries in the developing world in addition to our own interests, we will be guilty of driving the getaway car, to adopt a phrase used in a report compiled by some of the organisations in question a few years ago. I am sure the Minister of State is aware of the report, which was written by Dr. Sheila Killian. I am not satisfied with the Minister of State's answers. The Government of Ghana might not have raised some of the very legitimate concerns that have been highlighted by Deputy Cowen, but that is not a reason for us not to press them. We have an international obligation to do right by the people of these countries, particularly with regard to certain anti-abuse measures. While some countries might not have signed up to the convention, the Government has already said on the record that it will seek to have the measures in question included in bilateral treaties with those countries. As far as I understand it, those measures are not included in the agreement we are considering.

Sinn Féin cannot support this motion. As I have said regarding the first part of it, we think the scale of this matter is so important that it should be the subject of a full Dáil debate. This is not just a technicality. It affects the quality of life of huge numbers of people. We have a responsibility to do right by the developing world. I will not press the issue of a Dáil debate on the first motion, although I think it would be helpful. We will certainly not be supporting the second part of the motion. In light of the serious issues that have been raised by Deputy Cowen and me - I am sure Deputy Mick Barry intends to raise similar issues - I urge the Minister of State to consider the suggestion that this issue should be debated and decided on by the Dáil as a whole, rather than by this select committee.

Deputy Michael D'Arcy

I would like to respond to Deputy Ó Broin by talking about everything we have been doing since 2015, when Ireland was the first country to move on BEPS, anti-tax avoidance, profit-shifting and all the quasi-legal practices that some companies were engaging in. It has to be said that not every company was doing these things. We moved before anybody else did. We moved before we were obliged to move because we felt it was the right thing to do. Ireland takes very seriously its responsibility to prevent these activities and to help developing countries. Ireland was a developing country, in terms of our GDP ratios, 40 or 50 years ago. Our average EU ratio was significantly under the EU spend. In a European space and in European terms, we have benefitted from our European partners benefitting us via the EU. This multilateral convention is doing the same thing. It will ensure companies that are unscrupulously trying to avoid tax will not be allowed to get away with it. That is what this is about.

I said clearly in my opening remarks that this is a way of updating 3,000 international treaties in one fell swoop. We cannot make the countries that have not ratified the convention do so but, as we have said, we have a responsibility to go to those countries to update the treaties bilaterally. I expect that approximately 100 countries, or half the countries on the planet, are involved in the multilateral convention. I reiterate that we cannot make countries do this. Different jurisdictions move at different paces. We have said that we take our responsibilities very seriously. If we have to, we will go to the various countries one by one to adopt the treaties bilaterally. We feel this is a better way of doing it. As I have said, eight or nine of these processes have been finished. We expect, or hope, to finish our process sooner rather than later. This will ensure companies that are unscrupulously avoiding tax and thereby taking resources from people in other jurisdictions who need them most - I am not just talking about Ghana - do not get away with it.

Deputy Eoin Ó Broin

I would like to go back to what the Minister of State said at the outset. He suggested that countries will have the ability to opt in or out of certain provisions. When he spoke about why we might opt out of certain provisions or make certain choices, he said that the options we are not adopting "are primarily technical in nature and not relevant to Ireland's tax systems". If Article 12, for example, is not relevant to Ireland's tax system, why not adopt it? It seems to me that it is not being adopted for some other reason, perhaps because there are concerns arising from it. The same point can be made about option B in Article 13. From our point of view, if we wanted to demonstrate that we are serious about the multilateral instrument, we would not simply accept minimum standards - we would accept the maximum standards in all cases, particularly when they affect us.

Perhaps the Minister of State missed the point I was trying to make about the bilateral agreement. It is obvious that it is much better to try to do this by means of multilateral agreements. The Government has said on the record that where multilateral agreements do not apply, and we are engaged in bilateral agreements, it will pursue a range of commitments to try to insert provisions which are about protecting our interests while doing the right thing for the people of the developing world. Christian Aid and other agencies have raised concerns. Deputy Cowen has also raised concerns. It seems to me that we are doing the same thing we did before by adopting relatively minimal aspects of these treaties in a primarily self-interested manner. As a result, we are perpetuating the problems that are contained in these treaties, as all of the non-governmental organisations in the developing world have told us. We will not be the losers in this scenario - the losers will be the vast majority of the citizens of Ghana and other countries who will be deprived of revenue. I am not going to press the matter. I do not think the Minister of State's answer has satisfactorily responded to the questions other Deputies have raised. We cannot support the motion for that reason.

Deputy Michael D'Arcy

Article 12 is not a technical matter. I did not say in my speech that it was. I said that we chose to opt out of it because we do not know how it will work. The multilateral convention is a legally binding convention. One does not get to choose to opt out of it. We are satisfied that if it works properly, we can opt into it. That is why we are choosing not to accept Article 12 right now. Many other countries are doing likewise. There is some confusion in this regard. We do not know how it will establish itself. We do not know how it will work.

It might be helpful for me to read the note on Article 12, which is an important aspect of this matter. Article 12, which deals with so-called dependent agents, provides that an enterprise of one country "shall be deemed to have a permanent establishment" in the other country if it operates through a dependent agent, that is, a person or entity that acts under clear instruction of a head office in the first country. The current permanent establishment standard was creating concerns for civil law countries that are bound by law to interpret the texts strictly. There was concern about particular structures being set up to avoid having a taxable presence in large market countries. It is generally expected that other BEPS recommendations being introduced into domestic law should put an end to these structures, regardless of whether Article 12 is adopted by countries. Some guidance has been reached at the OECD on the level of profits that would be attributed to new permanent establishments created under Article 12.

However, there is still significant uncertainty as to how the test will be applied in practice. Reflecting this concern, approximately 60% of the countries that have signed the multilateral convention to date have indicated that they will not accept Article 12. Of the 74 countries with which Ireland has a tax treaty, only 24 have indicated that they wish to adopt Article 12. Based on the most recent OECD information available, it appears that only 17% of treaties around the world that will be impacted by the multilateral convention will be updated to include the definitions of Article 12. It is intended that Ireland will opt not to apply this article due to this uncertainty. However, this position will be kept under review as it is open to Ireland to lift our reservation on this article at a future date. It would also be open to Ireland to bilaterally agree to include this article in any of our tax treaties, should treaty partner countries make a sufficiently strong case to include it. As I stated, very few countries are choosing to accept this article as part of the multilateral convention but we will, on a case-by-case basis and equal negotiating footing, go back to all other countries with which we have a double taxation agreement and if it is appropriate to insert the article, we will do so individually.

Deputy Mick Barry

While anybody looking in on this debate would find it very technical, detailed and difficult to follow, some key issues need to emerge from it. I was surprised and interested to learn when I was researching this matter that Ireland has been Ghana's largest source of foreign direct investment since 2012. Tax revenue accounts for 16% of GDP in Ghana, which is a very low figure. The European average would be between 25% and 30%. The proposed arrangement would limit Ghana's taxing rights over income, profits and economic activity. There is a connection between the fact that taxation accounts for only 16% of Ghana's GDP and the fact that 5% of the country's children do not make it to their fifth birthday. What is the level and standard of public services in Ghana, for example, the health service and health programmes?

Any taxation agreement must nail down best practice and box off opportunities for wealthy individuals and corporations to avoid tax. I am not convinced that this agreement meets those requirements and nor are development organisations such as Christian Aid. The latter has produced a document that includes seven key questions for the Government, of which I will cite only two. First, why does the new tax treaty contain none of the provisions against tax abuse agreed in 2015 by OECD member states, including Ireland in Action 6 of BEPS, which Ireland has committed to implementing? Second, in 2017 the Department of Finance promised that Ireland would invite tax treaty partners that have not signed the OECD multinational instrument to introduce anti-abuse measures unilaterally in their tax treaties with Ireland. Did the Government make such an offer to Ghana? If so, why did Ghana decline this offer and, if not, why did it not make such an offer? Those questions have emerged in this discussion already.

I have listened carefully to the answers given by the Minister of State. I am not sure that I understand every dot and comma of what he said because this is highly technical material. He can correct me if I am wrong but his argument appears to be that because Ireland raised this matter with Ghana and it did not insist on these measures, there was nothing we could do and in any case there will be processes in the future that will help to nail down these issues. That is not good enough.

This is a technical debate but the issues are real. I support Deputy Ó Broin's suggestion that the core aspects of the Bill be debated on the floor of the Dáil. I will support any such formal proposal.

Chairman

Does the Minister of State wish to answer the questions raised by Deputy Barry?

Deputy Michael D'Arcy

I have answered the question. Ghana approached Ireland in 2014. We finished the negotiations in 2016 before the multilateral convention was concluded. We are now concluding the multilateral convention and we are satisfied that we are not at a minimum standard by any manner of means. We accepted all of the minimum standards and the best practice standards. We have some concerns about a multilateral convention. Having said that, if countries choose not to implement the multilateral convention through legislation, we can deal with them bilaterally by updating current agreements.

We are satisfied that this is the right thing to do. As I said to Deputy Ó Broin, even before the first OECD report on BEPS was published, Ireland moved on BEPS as well as tax avoidance and aggressive tax planning by some companies. We will not in any way facilitate such practices. We have the opportunity, when we move to the multilateral convention, to conclude this matter. If any country does not implement the convention, we will deal with it unilaterally. The Deputies can only ask us to do so much. Ghana, in which we have modest levels of investment of approximately €43.5 million, approached us. Double taxation agreements are good for business internationally. When companies are subject to double taxation, it leads to aggressive tax planning, as happened in the past. That is what happens if one does not deal with the issue.

The OECD is a well respected body and it will be a matter for it to ensure the treaties, over which it has oversight, are implemented.

Chairman

Does Deputy Barry wish to make concluding remarks?

Deputy Mick Barry

I will leave it at that.

Deputy Barry Cowen

I listened to the response of the Minister of State and his officials and there may be some merit in their argument. In light of the issues raised by NGOs, which are at the coalface and understand the practices that apply in these economies, and notwithstanding our commitment to sign new agreements with emerging nations and the benefits that can accrue from them for the economy, I caution the committee at this stage and ask the Minister of State to respond in writing to the questions that have been raised. We could then reflect on the response and revisit the issue on another date, rather than insisting on a debate in the Dáil at this juncture. We will adjudicate on the merits of debating the matter in the Dáil, but we need time to reflect on the Minister of State's written response.

Chairman

For the information of the committee, we are due to report back to the Dáil before 25 September. I remind members that these motions have been referred to us and are joined as a single motion and are not separate ones. The committee was instructed to consider the motion so the message that must go back to the House from the committee is predetermined and states we have considered the motion. That is one of the farces, in terms of the operation of this House. I am afraid that is the way it is and I cannot change the situation.

Deputy Barry Cowen

We could attach a note stating that when considering the motion it raised the following issues.

Chairman

No, we cannot. The message to the Dáil is simple - we have considered it. I share the same concerns that have been raised here and I would like the Minister of State to respond in detail to the submission that the committee received from Christian Aid, which asked significant questions. There may be a technical reason for all of these issues but the outcome is pretty much as Deputy Barry described. The message may go back to the Dáil that we have considered the motion, that the committee requires the further information requested. I ask the Minister of State to give a detailed reply to the Christian Aid submission. I suggest that we write to the Business Committee informing it that the members of this committee in attendance have asked for a full Dáil debate on the matter. There is nothing else that this committee can do other than what I have outlined.

Deputy Eoin Ó Broin

I am happy with the Chairman's suggestion.

Chairman

If my suggestion is acceptable to members then that is what we should do.

Deputy Michael D'Arcy

Can the Chairman furnish me with the document because my Department did not receive the submission?

Chairman

Yes, I have it here. The questions that we asked are directly lifted from the submission.

Deputy Michael D'Arcy

That is fine. We will respond.

Chairman

I ask the Minister of State to consider what the members have said here this morning in consideration of this. I ask him to convey to the Government the request made by members for a Dáil debate on the issue. While we will say it to the House that we have considered the matter, we will also write to the Business Committee asking for a Dáil debate. We ask him to carry our message direct to the Government to ensure that a Dáil debate of some kind happens. We will not declare the motion considered without debate because there has been no debate.

Deputy Eoin Ó Broin

Yes.

Chairman

Is that agreed by all of the members? Agreed. We will send a message to the Dáil but we await a detailed ministerial response to the submission and a response to our request for a Dáil debate. As it is now 11.15 a.m. I suggest that we suspend the meeting until 11.30 a.m. Is that agreed? Agreed.

Sitting suspended at 11.15 a.m. and resumed at 11.35 a.m.