Dáil Éireann Debate, Wednesday - 11 July 2018
113. Deputy Thomas P. Broughan asked the Minister for Finance his views on a report which alleges that Ireland is the top tax haven in the world; his further views on whether this and similar reports constitute a serious risk to Ireland's financial reputation and future economic development; and if he will make a statement on the matter. [30685/18]
Amharc ar fhreagraI understand that the Deputy is referring to report "The Missing Profits of Nations" by G. Zucman, T. Tørsløv and L. Wier, that examines attribution of profits by mutlinationals around the world.
Firstly, I reject any assertion that Ireland is a tax haven. The report does not provide any definition of a tax haven and appears to assert that Ireland, and many other countries, are tax havens without providing a rationale for that assertion.
In the report, the authors appear to use the terms "low-tax countries" and "tax havens" interchangeably. The inference that Ireland is a tax haven simply because of our longstanding 12.5% corporate tax rate is totally out of line with the long established position that a low corporate tax rate applied to a wide tax base is good economic policy for attracting investment and supporting economic growth.
The central analysis of the paper looks at links between the level of profit booked, and the level of wages paid in a country. This creates a totally misleading impression that corporate profits are or should be directly linked to wage levels rather than to the outputs of investment in all income generating activities such as investment in R&D, intangible assets, capital intensive machinery and investment in staff etc. A small country with high levels of high value adding FDI relative to the size of the domestic economy will of course appear like an outlier in this type of analysis.
It is important to be very clear – corporation tax is paid where value is created not simply where companies have their highest wage bills. It is therefore misleading to assert that profits are being artificially shifted by focusing on the ratio of profits to wages in each country.
In terms of reputation, Ireland has a competitive corporation tax rate, an attractive and stable tax regime and a strong reputation and commitment to transparency.
Ireland’s tax regime is designed to encourage the location of real, substantive and high-value adding investment in the country. We do not apologise for having a competitive tax regime because we ensure that our overall regime is fully in line with international standards for fair tax competition as agreed at the EU and the OECD.
It is clear that the only way to ensure that the right tax is paid in the right place is to ensure that all tax authorities have access to all relevant information for assessing whether they are owed any tax. This is why tax transparency and exchange of information among tax authorities is so vital.
Ireland has continuously made changes to our tax legislation to ensure we meet all international best practices for exchange of tax information. Last August, the Global Forum on Tax Transparency and Exchange of Information (an OECD led peer-review) awarded Ireland the highest international rating on tax transparency and exchange of information, one of only twenty two jurisdictions globally to be so rated following a new and enhanced peer review process.
Ireland actively contributes towards preventing aggressive tax planning through the implementation of the OECD BEPS reports and the numerous EU Directives we have agreed on tax avoidance. We continue to play our part in this ongoing work. It is widely acknowledged that difficulties in the international tax system mainly arise from asymmetries between the taxation systems of different countries. Only by acting together can we ensure that companies are taxed appropriately.
