Dáil Éireann Debate, Tuesday - 7 July 2015
118. Deputy Derek Nolan asked the Minister for Finance if he will instance the work undertaken by his Department to help develop tax and revenue systems in developing countries; and if he will make a statement on the matter. [27111/15]
Amharc ar fhreagra119. Deputy Derek Nolan asked the Minister for Finance if he is satisfied that tax treaties between Ireland and developing countries are such as to prohibit unfair tax avoidance by companies acting in those countries; if it is proposed to review such treaties; and if he will make a statement on the matter. [27112/15]
Amharc ar fhreagraI propose to take Questions Nos. 118 and 119 together.
Work relating to tax and revenue systems in developing countries falls to the Revenue Commissioners. Where the opportunity has arisen, for example in Rwanda a number of years ago, Revenue has shared its expertise in assisting tax administrations to modernise, particularly in relation to the automation of processes making use of information technology.
I am informed that Irish Aid, in collaboration with the Revenue Commissioners, is at an advanced stage of preparation of support to be provided to the Malawian Revenue Authority under the Tax Inspectors Without Borders (TIWB) Initiative. This initiative, run by the OECD Tax and Development Programme, aims at building capacity through targeted, hands-on tax audit assistance programmes where foreign tax auditors work with local tax auditors in developing countries on actual tax audit cases, directly transferring audit knowledge, techniques and skills through a 'learning-by-doing' approach.
Since 2013, a particular focus of Ireland's tax treaty negotiation work, which is principally undertaken by Revenue, has been to engage with African countries that wish to extend their treaty network. A tax treaty was negotiated with Botswana in 2013 and with Ethiopia in 2014; treaty negotiations with Ghana, which began in 2014 are nearing conclusion. In addition, Ireland's treaty with Zambia, signed in 1971, was renegotiated in 2014 and the replacement treaty was signed in March of this year.
I am satisfied that Ireland's approach to negotiations is respectful of the need for treaties to be mutually beneficial for both countries concerned in avoiding double taxation and preventing fiscal evasion. The effective operation of a treaty requires each country to be satisfied that the treaty meets its objectives. Tax treaties involve the sharing of taxing rights. Ireland considers that agreeing to specific source taxation, for example in relation to dividend, interest or royalty payments, in line with the treaty policy of those developing countries that follow the UN approach to such issues, ensures a practical and effective sharing of taxing rights.
Tax treaties are reviewed primarily on the basis of the age of the existing treaty. Where a country has sought to re-negotiate an old treaty, Revenue has agreed to the request regardless of the stage of development of the country concerned. Renegotiated treaties with two developing countries were signed in 2015. A replacement treaty with Zambia was signed in March 2015 and a replacement treaty with Pakistan was signed in April 2015. The original treaties date from 1971 and 1973 respectively. The renegotiations of these treaties, and indeed all renegotiations, are informed by the same principles of mutual benefit, and satisfaction with the treaty, based on effective sharing of taxing rights, that govern the approach to new treaties.
On a broader, multilateral, front, Ireland's support for Country by Country Reporting by multinational companies should result in the provision of this information to tax authorities in developing countries from 2017, which will be very useful in risk assessment in relation to multinationals' activity in those countries.
