Dáil Éireann Debate, Tuesday - 22 June 2021
229. Deputy Gary Gannon asked the Minister for Finance if his attention has been drawn to the lack of transparency surrounding special tax arrangements for multinational companies that Irish companies operating within the same sector cannot avail of; and if he will make a statement on the matter. [33558/21]
View answer230. Deputy Gary Gannon asked the Minister for Finance if there is a special tax arrangement for larger corporations or market dominant players that allow them to pay a minimal amount of tax to the Exchequer; if his attention has been drawn to any such arrangement; and if he will make a statement on the matter. [33559/21]
View answerI propose to take Questions Nos. 229 and 230 together.
It is unclear what the Deputy is referring to and if he has any specific concerns, I will be happy to address those if further details can be provided. However, I can assure him that Ireland has a clear and transparent statutory corporation tax regime that applies to all companies equally and raises billions in revenue each year. Taxable trading income is taxed at 12.5% in Ireland, one of the most competitive headline rates of corporation tax in the OECD. This rate is applied to a broad base – a policy which is endorsed by the likes of the OECD because it is good for economic growth. In many countries, a high statutory rate is mitigated by its application to a relatively narrow base, so producing a lower effective rate. By contrast, Ireland’s effective tax rate of between 10% and 11% is close to the 12.5% headline rate and the difference relates to a small number of targeted tax measures provided for in legislation.
Furthermore, Revenue has no authority to depart from or supersede the law. Revenue’s Tax and Duty Manual Parts 37-00-00a and 37-00-40 outline the procedures to be followed where taxpayers are seeking Revenue’s advance confirmation as to how a transaction will be treated for tax purposes, based on the relevant legislation. As Revenue publishes detailed guidance, opinions should only be required in relatively limited circumstances. Nevertheless, any opinions given by Revenue are not legally binding and it is open to Revenue officials to review the position when a transaction is completed and all the facts are known.
Finally, Revenue analysis shows that foreign-owned multinationals were responsible for €9.7 billion (82%) of net corporation tax receipts in 2020 and Irish-owned multinationals accounted for €0.8 billion (7%) of net corporation tax receipts. Non-multinationals paid €1.3 billion or 11%. Revenue analysis of 2019 tax returns also show that foreign-owned multinationals accounted for over 2.4 million employments in companies with combined income tax, USC and PRSI payments for these employees of €21.5 billion. Foreign multinationals account for 32% of employment and 49% of employment taxes. In 2019, Revenue calculated the average effective tax rate for all companies as 10.3% while for foreign owned multinationals it was 11.1%.
