Business Irish

Saturday 10 December 2016

Multinationals establishing 'deeper Irish roots' - Noonan

Published 07/01/2016 | 02:30

Michael Noonan. Photo: Mark Condren
Michael Noonan. Photo: Mark Condren

Multinationals have established "deeper roots" here and are paying more tax because of the measures taken to address the Double Irish, Finance Minister Michael Noonan has said.

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Exchequer Returns have shown the tax take was more than €3bn ahead of target for last year, with the vast majority of that overperformance due to better-than-expected corporation tax receipts.

The Department insists the corporation tax overrun is sustainable and will be largely repeated this year.

The Revenue Commissioners has put it down to improved trading conditions and the favourable exchange rate.

But for the first time, Mr Noonan has revealed he also believes measures related to Ireland's tax offering may also have contributed.

He has pointed to what he believed was an increase in Research & Development (R&D) activity.

"I think what happened was the reforms we brought in in changing the residential basis, which was the method availed of for the so-called Double Irish," Mr Noonan said.

"I think a number of multi-nationals have brought intellectual property on shore and as a consequence have put down deeper routes in Ireland and as a second consequence are liable for more tax."

Amid international pressure, the Governnment scrapped the so-called Double Irish for new companies entering Ireland from January 1, 2015, and is phasing it out for existing companies up until 2020.

It was one of the biggest changes to Ireland's corporate tax structure since the 1990s.

IDA chief executive Martin Shanahan had already said the closure of the loophole would not harm investment.

In a statement, the Department of Finance said the number of multinationals locating in Ireland has continued to increase in the wake of Governmment moves on tax.

"As part of Budget 2015 the Minister for Finance introduced the Roadmap for Ireland's tax competitiveness. This contained a comprehensive package of competitive tax measures designed to ensure that Ireland is well positioned to maintain and expand our position as a thriving hub for Foreign Direct Investment. This included changes to the Irish rules on tax residency and the R&D tax credit.

"Since these changes were introduced the pipeline for FDI has continued to flourish."

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