Corporation tax report based on ‘flawed premise’ – Noonan

Departmental research report on the issue will be ready by end March for debate

Independent TD Richard Boyd  has repeatedly questioned the accuracy of the 12.5 per cent headline corporation tax rate charged in Ireland. Photograph: Collins Courts

Independent TD Richard Boyd has repeatedly questioned the accuracy of the 12.5 per cent headline corporation tax rate charged in Ireland. Photograph: Collins Courts

Thu, Feb 20, 2014, 22:42

A report on corporation tax published last week which showed a 2.2 per cent effective rate, was based on a “flawed premise”, Minister for Finance Michael Noonan has said.

He said the figures were estimated by dividing the amount of Irish tax paid by a total profit figure that included substantial profits made by companies not tax resident in Ireland.

The Minister also said his department was preparing a report on corporation tax that would be ready by the end of March and would be submitted to the Oireachtas finance committee for debate.

Mr Noonan told Independent TD Richard Boyd Barrett that the report he quoted was based on a “flawed premise, a false premise”.

Mr Boyd Barrett, who has repeatedly questioned the accuracy of the 12.5 per cent headline corporation tax rate charged in Ireland referred to a research paper by Prof James Stewart, associate finance professor at Trinity College Dublin, which stated that US multinationals reported paying tax rates of 2.2 per cent in Ireland in 2011.

The report also challenged Government assertions that corporate tax rates were just below the 12.5 per cent headline rate and suggested it was similar to that charged in tax havens such as Bermuda.

Mr Boyd Barrett said “there appears to be an absolute dismissal of even a serious attempt to investigate and examine this issue, given the huge divergence in figures being bandied around for corporate tax”.

Rejecting the claim, Mr Noonan stressed that all companies operating in Ireland were liable to 12.5 per cent on profits generated from their trading in the State, allowing for tax reliefs such as research and development and in 2011 the tax rate was 10.5 per cent.

Mr Noonan said confusion on the topic had led to a number of “unhelpful statements” being made publicly. The report being prepared in the Department of Finance would explain the basis for “calculating the numerous figures that are quoted internationally and attributed to Ireland, often on an incorrect basis.

“This will include the 2.2 per cent rate quoted last week by Prof Jim Stewart and the 6.8 per cent rate implicit in the Eurostat figures generated,” said Mr Noonan.