Minister for Public Expenditure and Reform Brendan Howlin has said new research from Trinity College Dublin, which suggests Ireland's effective tax rate for US multinationals may be as low as 2.2 per cent, will not bring the country's corporate tax rate under pressure.
“The Irish tax rate on corporate business is very clear - it’s 12.5 per cent - we don’t have any brass plate companies like others do have. The tax rate in Ireland is what it says on the tin,” he added.
Mr Howlin said Ireland was involved with the OECD in an international survey and effort to ensure that there is complete tax compliance, and that all companies operating in Ireland pay the appropriate tax in a transparent manner.
The Organisation for Economic Co-operation and Development is examining ways of closing corporate tax loopholes such as the “double Irish” and “Dutch sandwich”.
The research paper by Prof Jim Stewart, associate professor in finance at Trinity College Dublin, challenges Government claims that effective corporation tax rates in Ireland are just below the headline rate of 12.5 per cent.
The paper states the effective tax rate in the PwC report is based on a hypothetical Irish company that sells ceramic flower pots.
Feargal O’Rourke, head of tax at PwC, this morning said there was a “hole the size of the grand canyon” in the data referred to in Professor Stewart’s study.
Speaking on RTE’s Morning Ireland, he said it was incorrect to say that US subsidiaries operating in Ireland pay a 2.2 per cent tax rate.
“It (the research data) is counting companies that have no operations in Ireland whatsoever. They were born here but have no asssets, no income, no activity whatsoever. These companies do not operate in Ireland. No wonder you’d get 2.2 per cent.”