Revenue denies ‘special’ tax deals

The Government does not negotiate individual tax rates or tax arrangements with multinationals, Revenue’s Eamonn O’Dea told the Oireachtas finance committee hearing into taxation.

Ireland’s corporate tax rate has come into focus over recent months following US Senate hearings which found that Apple had significantly reduced its tax rate through Irish-registered companies.

Moreover, it emerged last week that the European Commission has launched a probe into Ireland’s tax system.

Sinn Féin TD Pearse Doherty wanted to know did the Government have the ability to scrap the system whereby multinationals were allowed to set up Irish-registered but non-tax resident entities. This system was pivotal in the operation of a complex tax structure known as the ‘double Irish’ that enabled multinationals to route royalty and patent revenues through Ireland to a tax haven.

Gary Tobin from the Department of Finance said it was possible to close down this provision, but it would have a marginal impact on global tax avoidance by multinationals. Instead of acting unilaterally, it was best to wait for the OECD to complete its initiative, base erosion and profit shifting, which is aimed at clamping down on tax avoidance, he said.

Mr Doherty said the Government had the right to ask a firm that is incorporated in this country where it is tax resident. He asked if the Department of Finance or Revenue had a list of companies incorporated in Ireland but not tax resident here. Neither had a list.

Mr Tobin told Fianna Fáil TD, Michael McGrath, that the EU probe did not arise out of a specific complaint by another country. He described it as an information gathering exercise to see if any state aid rules had been broken or compromised.

No timeframe could be provided on how long the probe would take.

Mr Tobin contacted a representative from Apple to clear up some testimony provided by executives, which suggested the firm had negotiated an individual tax rate with the Government. This was inaccurate and potentially damaging to Ireland’s reputation. The Apple CEO subsequently provided a clarification.

Mr O’Dea said Ireland’s tax system did not favour multinationals over SMEs.