Eight of top 100 multinationals pay no tax on profits - Ireland losing out on billions of euro every year

Ireland is losing out on billions of euro every year because eight of the 100 most lucrative Irish-based multinationals pay no corporation tax and five more have a tax bill of less than 1%, writes Fiachra Ó Cionnaith.

However, the Revenue Commissioners and the Department of Finance have staunchly defended the current system, with Revenue chairman Niall Cody insisting “I don’t believe Ireland is a tax haven”.

The details emerged at the Dáil’s Public Accounts Committee, just hours after US President Donald Trump launched a fresh attack on Ireland’s tax laws.

In a submission to the committee, Comptroller and Auditor General Seamus McCarthy said although Ireland’s official corporation tax rate stands at 12.5%, in reality the “effective” rate for some of the largest firms based here is far lower than that.

Comptroller and Auditor General Seamus McCarthy

Citing lucrative multi-national firms, he said their real payment rates are reduced further by the use of de facto loopholes such as research and development tax credits and double-taxation where a foreign firm pays its taxes elsewhere.

“For the top 100 companies ranked by tax due, the average effective tax rate was 12.4%,” he said.

“Eight of the 100 companies with the highest taxable income had effective tax rates of zero, including some which had negative rates — ie, instead of paying corporation tax, they received rebates.

“A further five had an effective rate of less than 1%.

“These very low effective rates reflected the use by the companies of significant tax credits and reliefs in particular double taxation relief and research and development tax credits.”

Revenue chairman Niall Cody and Department of Finance assistant secretary general John Hogan said there is nothing wrong with the current system.

Noting that these multi-nationals, which were not named, generate €6.4bn a year from PRSI, Mr Cody told Social Democrats TD Catherine Murphy “the multinational sector in Ireland is a significant employer, a significant driver to the economy”, before adding to Sinn Féin TD David Cullinane: “I don’t believe Ireland is a tax haven.”

Niall Cody

Mr Hogan was similarly protective of the current system, saying “we’re much more transparent” than other countries because Ireland is up front about its tax exemptions.

However, the claims were criticised by PAC chairman and Fianna Fáil TD Sean Fleming — who noted the double-taxation system and research and development rebates are costing €1.5bn every year — while other members warned vital funds are failing to be secured.

Hitting out at the tax levels, Ms Murphy said: “We’ve a generous tax rate, 12.5%, its very generous but it’s not the ‘effective’ rate. Essentially people will feel like kind of eejits, we’ve bailed out sectors because of the crash.

“I understand companies need certainty. But people need certainty as well.”

Mr Cullinane said the current rules allow for “a system of secrecy”.

Independent TD Catherine Connolly added: “I’m certainly not going to quote Donald Trump, but he has a view on Ireland.

“The narrative out there is Ireland is not paying taxes.”

Concerns over Ireland’s corporation tax system have repeatedly been raised at home and abroad due to tax haven claims and the ongoing €13bn Apple tax stand-off.

Taoiseach Leo Varadkar and French President Emmanuel Macron clashed over the 12.5% rate last month, while Mr Trump singled out Ireland on Wednesday night in a speech in Missouri.

“For too long our tax code has incentivised companies to leave our country in search of lower tax rates. Many, many companies,” he said.

“They’re going to Ireland. They’re going all over.”

The Public Accounts Committee also heard that agreement has almost been reached with Apple over the collection of €13bn.

Mr Hogan confirmed the money remained with Apple and would not be transferred until next year.

This story first appeared in the Irish Examiner.

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