The so-called ‘Double Irish’ two-tier structure is a tax-planning arrangement which has been designed and developed by tax and legal advisers. It relies on arbitrage between the different tax rules used in different countries and is categorically not part of the Irish tax offering. Differences arise in the legal and tax systems between countries. International tax planning takes account of these differences in national systems and rules. What companies do outside of Ireland is beyond the scope of the Irish tax system. We cannot conclusively determine the effective rate of tax paid under international tax structures by reference to taxation in Ireland alone.
The profits charged in Ireland fully reflect the functions, assets and risks located here by a multinational group. The payments to the non-resident company represent the required remuneration of intellectual property assets funded and owned outside the State and its tax payments are properly reduced in these circumstances by reference to expenditure incurred for the purpose of its trade. Ireland cannot expect to receive or retain the remuneration of these assets.
The only way to effectively deal with such arrangements is for countries to work together to examine these structures and to consider how international rules can be amended to ensure fair levels of taxation. Ireland remains fully committed to this approach to ensure fair play in international taxation. In this regard, Ireland is participating in projects at EU and OECD level which aim to address international tax issues.
My Department has been actively engaged in the OECD "Base Erosion and Profit Shifting" project, which aims to address these issues, and an action plan is expected later this year. The Irish Presidency of the EU Council is making significant progress on a number of key files in the area of tax evasion and tax fraud and we hope to bring them to a conclusion in the coming months. As President of the EU Council, I and EU Tax Commissioner Algirdas Semeta sent a joint-letter to the Finance Ministers of the other 26 EU Member States outlining seven key areas where concrete action can be delivered in the short term. Significant progress on the seven priorities set out in the joint-letter was made at the May Ecofin and further progress is hoped for at the June Ecofin.