Ireland not a tax haven, says OECD official

Ireland is not a tax haven and has nothing to fear from proposed legislation that aims to clamp down on tax avoidance by multinationals, according to the head of tax policy at the OECD.

Pascal Saint-Amans, the director of the Centre for Tax Policy and Administration at the OECD told an Oireachtas sub-committee on global taxation that Ireland did not meet any of the criteria of a tax haven.

“The answer is very simple, Ireland is not a tax haven,” he said in a live link-up between the Oireachtas members and his Paris office. He said Ireland has one of the lowest corporate tax rates among western countries, but in the view of the OECD “this is fair tax competition”.

People before Profit TD Richard Boyd Barrett said that though Ireland may not meet the official criteria, recent evidence presented in US Senate hearings suggested the country was “in spirit” a tax haven.

It emerged the US technology giant Apple has avoided paying tax on roughly €30bn in profits by routing profits through Irish affiliated companies.

Mr Saint Amans said this sort of aggressive tax planning was enabled by gaps in domestic tax laws of different countries rather than any specific Irish legislation.

The OECD has just published a report on “base erosion and profit shifting” which it will introduce over the next 18-24 months.

Ireland would not lose any real businesses because of this legislation, said Mr Saint-Amans. “Ireland could become even more attractive for real businesses.”

Ireland’s low corporation tax rate is under the spotlight with a survey showing one multinational software company paying as little as 0.6%. The Reuters survey examined accounts for hundreds of subsidiaries of the biggest US technology companies and found most do not declare a tax residence for their main business in the biggest European markets.

It highlighted the case of Adobe, one of the world’s leading software groups, which paid just €3m tax in Ireland on €500m — 80% of its non-US income — which was generated through its Dublin office.

According to Irish corporate filings, Adobe employs 120 people in Dublin, around 1% of its global workforce; three are engaged in software R&D.

Yet Adobe’s Irish operation generated 80% of its non-US income in recent years — more than $500m annually in 2010 and 2011.

Many of the firms examined by Reuters declared Irish subsidiaries as their sole or primary tax bases in Europe, even though they operate others in countries like Britain, France, or Germany where most of their sales or marketing staff are based. This helped them to pay an average effective tax rate on overseas income of 5.7%, less than half Ireland’s 12.5% headline rate of corporate tax. Adobe paid 0.6%.