Dáil Éireann Debate, Tuesday - 27 March 2018
193. Deputy Richard Boyd Barrett asked the Minister for Finance his plans to undertake a comprehensive review of all corporation tax reliefs and expenditures to establish if such tax reliefs benefit the public and society or are simply providing a mechanism for extensive tax avoidance and private corporate profit; and if he will make a statement on the matter. [13629/18]
Amharc ar fhreagraThe Irish corporation tax regime contains a small number of specifically targeted tax reliefs. The focus of these reliefs is on the creation of additional employment, as is consistent with current government policy, and on innovation, with a view to generating high value-added economic activity in the country.
Some other countries have a high headline rate of corporation tax which is then supplemented by a high number of tax reliefs which reduce the overall rate of tax paid. By contrast, the approach in Ireland is transparent: we have a competitive headline rate of corporation tax which is applied to a broad base.
The effective tax rate of companies in 2015 was provisionally calculated by the Revenue Commissioners as 9.8%, representing a marginal increase on the 2014 rate of 9.7%. In 2012 and 2013, the effective rate was 10.1%. I would note that while these percentages are lower than the 12.5% headline rate, this can be attributed to the availability of the small number of targeted measures, such as the R&D tax credit, available in Ireland which may lower the effective rate of corporation tax paid.
The issue of tax avoidance has been at forefront of the international tax agenda in recent years. The agreement of the OECD BEPS reports in late 2015 represented a landmark achievement in agreeing comprehensive reform of the international tax system. Ireland has taken a number of steps towards implementing the BEPS recommendations and the Coffey Review sets out a roadmap for Ireland to follow in bringing certainty to the implementation of the remaining recommendations, beginning with the launch of a consultation process which is now underway.
In keeping with our commitment to transparency, Ireland was among the first countries to implement Country by Country Reporting. These reports will be exchanged with all relevant countries to ensure tax authorities have a clear picture of the activities of large multinationals and can assess any risk that the correct tax has not been paid in the correct place.
Ireland was also among the first countries to sign the OECD BEPS multilateral instrument (MLI) in June last year. This MLI will provide the mechanism for extensive changes to tax treaties globally. It will ensure that tax treaties are updated to reflect a number of important OECD BEPS recommendations, including agreed standards on treaty shopping and dispute resolution. The first steps towards ratification were made in Finance Bill 2017.
