Kenny rejects criticism of Ireland's corporate tax system

Taoiseach Enda Kenny has rejected criticism of Ireland’s corporate tax system, saying that the Government supports moves towards new international rules for “stateless” companies.

He was responding to a report in yesterday's Irish Times which disclosed computer company Apple has paid just $36 million in tax on profits of more than $7 billion on its Irish-registered operations.

Answering questions at a joint press conference with German chancellor Angela Merkel at the end of the European People’s Party congress in Dublin, Mr Kenny said Ireland was participating in moves by the OECD to tackle “statelessness” by multinational companies.

Ms Merkel told the press conference a level playing field was required in respect of tax and changes would be required in the next few years.

“We asked the OECD to develop clear rules for this and the G20 dealt with this. I think things need to change in the next few years and they will change and we will have a level playing field on this so I think we are on the same page and are on a good track,” she said.

'Flawed premise'
The Department of Finance said yesterday that reports of extremely low figures of corporate tax in Ireland are based on "a flawed premise".

A spokesman said two separate scenarios were often confused in discussions on the effective rate of corporation tax. “The first is the global rate of tax which is paid by multinational companies who operate across a number of jurisdictions. This is a ‘blended’ rate which takes into account the amount of tax charged across all of the countries that a company trades in and not just Ireland.

“The extremely low effective rate figures that have been quoted recently and attributed to Ireland are based on a flawed premise.”

He added the figures were estimated by dividing the amount of Irish tax paid by a total profit figure that includes substantial profits made by companies that are not tax-resident in Ireland. “Ireland cannot tax profits that are properly attributable to other jurisdictions,” he said.

The spokesman said the second issue was the effective rate of tax applying in individual countries and he insisted all companies operating in Ireland, domestic businesses and multinationals, were charged corporation tax at the 12.5 per cent rate.

'Nothing surprising'
Minister for Agriculture Simon Coveney said there was "nothing surprising" about the latest figures: "This isn't a new story. There is nothing surprising here."

Sinn Féin finance spokesman Pearse Doherty said the Government would react with a mixture of denial, embarrassment and silence, because they had no real interest in challenging multinational tax companies abusing loopholes in Irish tax laws.

He said that following previous revelations he wrote to the Oireachtas finance committee asking for the establishment of a sub-committee to examine the accusations being made concerning Irish tax law. “My request was acceded to, but only after it was met by much hostility and ridicule by members of Fine Gael, Labour and Fianna Fáil, who seem less concerned about Ireland’s international tax reputation, and more about their relationships with individuals in multinational companies.”

The media had done a good job in exposing abuses in the tax code, but Fine Gael, Labour and Fianna Fáil were trying to keep a lid on the truth, he said.