A new OECD report has again put Ireland’s tax regime under the spotlight highlighting the large amounts in corporation tax US multinationals pay the Irish exchequer.
The figures from the Paris-based Organisation for Cooperation and Development detail figures for the first time on a country-by-country basis and show that in 2016 Ireland collected $5.5bn (€4.8bn) from all types of large multinationals, of which $4.3bn was accounted for by US multinationals.
The OECD said in its report that multinationals account for significant shares of corporate tax revenues in several jurisdictions, ranging from 3% and to 65% in Ireland, which is the highest level of the up to 138 jurisdictions covered by the OECD.
It also details the intellectual property tax regimes set by Ireland and other countries.
Ireland and its corporation tax regime will be in the world spotlight again next week when Apple will hear a decision from the EU General Court on an appeal that it must pay €13bn in back taxes to the Government.
EU competition chief Margrethe Vestager ruled in 2016 that Apple struck a sweet-heart deal here that meant it benefited from illegal state-aid by paying a paltry level of tax over a number of years.
Any ruling is likely to be appealed one more time to the EU’s top court, which Tánaiste and Business Minister Leo Varadkar confirming in remarks that the tax decision was likely to be appealed either way.
Although incomplete, the OECD said the figures “suggest a number of preliminary insights”, including that "there is a misalignment between the location where profits are reported and the location where economic activities occur, with MNEs (multinationals) in investment hubs reporting a relatively high share of profits compared to their share of employees and tangible assets”.
The figures on US multinationals will not startle Irish observers but they mark only the start of a process meant to increase the flow of information from tax authorities around the world.
Ireland has for long been the subject of accusations from the US and large European countries, in particular from France, that its corporation tax regime unduly favours multinationals at their expense.
The OECD is ushering in reforms that will shift the tax payment towards the countries where corporates generate most of their sales and profits -- which in Europe will be the large populous countries.
The Irish Government, which has long fought for the principle of tax location, has conceded that the OECD reforms will alter the global tax landscape and will likely in time reduce the base from which the exchequer levies corporate taxes.
The criticism of Ireland from the US predates the administration of President Donald Trump and included former President Barack Obama closing tax loopholes.
However, President Trump has repeatedly signalled out Ireland and the large number of US multinationals based here, including the US pharmaceutical giants, which he suggests ought to be manufacturing drugs in the US.