Multinationals pay their fair share of corporate tax, IDA chief claims
Overall, foreign firms based in Ireland pay a corporate tax wedge of €2.7bn, which works out at €19,000 per employee.
Moreover, the corporate tax take is the equivalent of 2.6% of GDP compared with an EU average of 2.4% and 3% in the UK, said Mr O’Leary. He argued that Ireland has a transparent 12.5% corporate tax rate, which was attractive to potential investors because it was applied to all companies uniformly.
The Government did not negotiate individual tax rates with multinationals contrary to testimony provided by Apple executives before a US Senate hearing in May.
Mr O’Leary said he flew to Washington the day after this testimony was heard in order to clear up the mis-understanding.
The effective corporate tax rate was very close to the headline rate unlike other jurisdictions, he said.
In some Swiss cantons, the rate varies between 1.8% and 3.2%, although there was no transparency. Singapore and the Netherlands operated similar regimes.
And even though the UK was vocal about tax fairness, its patent box regime was discriminatory and lacked transparency, he added.
There was roughly €200m in tax credits claimed by multinationals last year and the IDA provided €45m in grants for research and& development. &Mr O’Leary acknowledged a probe by Revenue, which found that some companies had abused the tax credit system and had incurred fines. He assured the committee that these incidences were isolated.
He declined to explain the intricacies of complex tax structures known as the ‘double Irish.’ The OECD’s base erosion and profit shifting initiative was aimed at eliminating abuses through these structures, he noted.
Mr O’Leary admitted the IDA is unlikely to meet its targets for putting investment in the regions.
Companies chose where they wanted to locate and have a preference for large urban centres, he said.
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