Paradise Papers show ‘relentless quest’ of wealthy to avoid tax

Closing of tax loopholes a constant ‘game of cat and mouse,’ Taoiseach tells Dáil

Taoiseach Leo Varadkar meeting Apple chief Tim Cook in San Francisco last week. Photograph: Suzanne Lynch.

Taoiseach Leo Varadkar meeting Apple chief Tim Cook in San Francisco last week. Photograph: Suzanne Lynch.

 

Closing tax loopholes is “constantly a game of cat and mouse,” Taoiseach Leo Varadkar has said. He added that very smart tax lawyers were going through legislation looking for gaps that could be exploited.

In a defence of Ireland’s tax policy in the wake of the release of the Paradise Papers, Mr Varadkar said that Ireland had closed tax loopholes but added that when one jurisdiction acts, companies just move to another.

Social Democrats TD Róisín Shortall accused him in the Dáil of engaging in a “cop out” when he said tax avoidance is an international problem that requires an international solution.

However, Mr Varadkar insisted “it is a statement of fact”.

“If a loophole is closed in one jurisdiction, companies simply move to the next.”

Ms Shortall questioned him about the Apple revelations in the Paradise Papers and asked if Ireland’s capital allowance regime was changed last year to allow the company “to keep its formerly stateless profits entirely untaxed” after the double Irish tax provision was closed.

“Was it done to compensate Apple for the loss of the Double Irish?” she asked.

Mr Varadkar replied: “Not to my knowledge but it may be a question to put to the Minister for Finance.”

The Minister, Paschal Donohoe, had spoken to the chairperson of the Revenue Commissioners who will examine the Paradise Papers and “if further action is required it will be taken,” he said.

The Taoiseach said in the past couple of years Revenue had collected €1 billion in targeting offshore operations by companies.

‘Relentless quest’

Ms Shortall said “the facilitation of Apple’s tax arrangements by successive Irish governments” had had a “considerably negative impact” on Ireland’s reputation.

The Paradise Papers showed “the relentless quest of the wealthy and powerful, the great and the good, to find ways of avoiding tax”.

She said the double Irish tax provision used by Apple was deemed by the European Commission as State aid, but Mr Varadkar said the Government rejected this ruling. The Government was “not involved in any special arrangement with Apple” or in providing State aid and that was why it was fighting it.

The Social Democrats TD said that after the government was pressured to act, then minister for finance Michael Noonan signalled in 2013 that he intended to close down the double Irish tax arrangement.

After the double Irish ended the Paradise Papers revealed that Apple “went on a jurisdiction shopping spree in search of a tax-dodging deal”.

The corporation registered two of its three Cork companies in Jersey and the third in Ireland as Apple Operations Europe.

‘Tax breaks’

She said that this, “combined with the changes made to the capital allowances regime in 2016, allowed them to sell their IP back to the Irish registered company and avail of the massive tax breaks which this measure facilitated”.

Ms Shortall asked if Apple or their representatives requested a change to the capital allowances regime. How much Apple benefited from the change and how much had the State lost, she said.

Stressing that tax avoidance was an international problem that required an international answer, Mr Varadkar said that Ireland was an international leader in tax transparency and the OECD described the State as one of only 22 countries so compliant.

He said they had also signed up to information sharing, sharing from one country to the next on how much each company is paying in tax in different jurisdictions.

“That will prove very useful as for the first time we will know how much a big company has paid in tax in Ireland, how much it has paid in France and how much it has paid somewhere else.”