Taxing issues: multinationals still routing profits through Ireland

Multinationals are continuing to route billions of euro in profit to and through Ireland to avoid tax, according to a new report by Oxfam Ireland.

The study, which suggests that Government measures aimed at tackling tax avoidance are failing, also reveals that incentives and tax relief for the aircraft leasing industry alone cost the Irish taxpayer approximately €577 million in foregone corporate taxes every year.

According to the "Mantras and Myths: A True Picture of the Corporate Tax System in Ireland" report, tax loopholes are costing the Irish taxpayer hundreds of millions of euro each year.

It says Ireland’s extensive network of legal double taxation agreements means companies operating here can still potentially shift profits to low tax jurisdictions such as Qatar and Panama beyond the 2020 end-date of the so-called “Double Irish” loophole.

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The study highlights the potential negative impact of Ireland’s corporate tax system on developing countries and how its lack of full transparency leaves them and the Irish public in the dark about where companies make their profits and pay tax.

"Corporate tax dodging is not a victimless crime. Not only does Ireland harm its own reputation by allowing such practices, but profits that flow through Ireland without being taxed here should have been taxed elsewhere," said Oxfam chief executive Jim Clarken at the launch of the report.

Developing countries

The charity estimates that as much as $100 billion is lost to developing countries every year as a result of corporate tax avoidance schemes.

Oxfam's report acknowledges that the Irish Government has sought to reform the tax system but says it has concerns that they fall short.

“We need to have an honest discussion about corporate tax avoidance in Ireland and be prepared to admit that while we’ve made a good start, there is still a secretive network of loopholes to be exposed and removed if harmful. Despite some improvements, reporting requirements for multinational corporations’ tax activities are still opaque,” said Mr Clarken.

Oxfam is calling for a review of Ireland’s double taxation agreements and of its transfer pricing legislation to tackle profit shifting.

The Department of Finance said it disagreed with the assertions made by Oxfam in its report and is seeking a meeting to discuss its study.

“The report makes a number of recommendations of action that Ireland should take to amend our corporate tax system. However, in many cases, Ireland has already taken, or committed to taking, action in respect of these recommendations. In other cases, the proposed recommendations misunderstand the nature of our tax rules and our tax treaty network,” said a spokesman for the department.

“Ireland remains committed to global tax reform and will continue to take actions as set out in the update on Ireland’s International Tax Strategy which was published with Budget 2017,” he added.

The Government has previously rejected claims by the charity that Ireland is a corporate tax haven with both Taoiseach Enda Kenny and Minister for Finance Michael Noonan recently criticising the charity for a report published in December that named the country as one of the worst havens in the world.