The globally recognised definition of what constitutes a "tax haven" is set down by the OECD. Four criteria have been identified: minimal or no tax rates; lack of transparency; lack of exchange of information and lack of substance or economic activity. None of these four criteria apply to Ireland, a fact that has been acknowledged in recent months by Algirdas Semeta, the European Commissioner responsible for tax policy. The Director of the OECD's Centre for Tax Policy and Administration has also acknowledged recently that Ireland competed fairly for Foreign Direct Investment. However, not everyone agrees with the OECD's criteria. Some commentators, whether they be political, media, academic or business, hold a different view and have developed their own criteria to identify countries they regard as tax havens. Some of these commentators' analysis erroneously includes Ireland and many other countries with high reputations, as problem jurisdictions. These commentators are entitled to their opinion but in my view, and in the view of many countries around the world, they have got it wrong.
I would like to remind the Deputy of a few salient facts:
- We have a very strong track record of attracting companies of real substance to invest and create thousands of jobs in Ireland. Many of the large Multi-National Corporations (MNCs) are here for many years and see Ireland as an excellent base to serve their customer in Europe and further afield.
- These corporations have set down significant roots in the Irish economy and the Irish Government will continue to take steps to enhance our attractiveness through investment in our people, investment in our infrastructure and our strong commitment to Europe.
- Over 1,000 MNC’s have successfully located in Ireland and, despite the challenges that the Irish economy has faced in recent years, that pipeline has remained strong. Over 100,000 are employed directly by Multi-national companies in Ireland and they are an integral part of our past, our present and our future. Indeed, it is estimated that over 250,000 people are employed indirectly across the country servicing this key sector of our economy.
- These are companies of real substance and they are certainly not “post-box” companies – the Multi-National Corporations (MNCs) that establish operations in Ireland have created many thousands of sustainable, well-paid, jobs.
- Our competitive taxation system is, of course, an element of the Irish package and we remain committed to our competitive 12.5% tax rate.
- Our taxation system is open and transparent and all companies in Ireland pay tax at 12.5% on their profits earned in Ireland. Of course, profits earned by these companies that are outside the scope of the Irish tax system are not subject to Irish tax. Incorrectly counting these profits as “Irish profits” is often the reason for the inaccurate analysis of the Irish taxation system and throws up very low effective tax rates. However, we can only tax profits that are liable to tax in Ireland.
- Added to all of this, we exchange tax information with 80 different jurisdictions around the world through our network of international agreements, either by way of a Double Taxation Agreement of a Tax Information Exchange Agreement.
Aggressive tax planning by companies is a major issue for legislators across the world and needs to be addressed. However, it is clear to us from our work at the forefront of efforts at European and OECD level that these issues cannot be addressed at national level alone - we need a co-ordinated international response. The OECD's Base Erosion and Profit Shifting (BEPS) project represents that international response and work is well underway in this regard. Ireland has given its full support to the project and is working closely with our international partners on this important work. I look forward to seeing the results.