More brass necks than brass plates in tax row
The hypocrisy of the Government's response to the furore over US multinationals switching residency to Ireland for tax reasons has been nothing short of extraordinary.
For about 12 months now, the Government has been acting the altar boy - like an innocent bystander watching an American problem unfold.
Yet it has been less than 12 months since we had to change legislation preventing companies here from having no tax residency anywhere.
US president Barack Obama waded into the debate last week and name-checked Ireland in his comments about inversions, where US companies buy an Irish company and then base the new holding company in Ireland for tax reasons.
Ministers say they want to help. Junior Finance Minister Simon Harris said it was a US issue caused by an anomaly in the US tax code. "Inversions are of no benefit to this country. They don't bring jobs. They don't bring tax here. In fact there is a potential cost here."
So where were Bruton, Noonan and Harris over the last decade when successive Irish governments introduced measures which enhanced the financial benefits these inversions could bring about? Admittedly, they were not in government, but Dail debates around these measures didn't throw up much by way of warnings or criticism from politicians of any persuasion.
This all started in 2004 when then finance minister, Charlie McCreevy, introduced special incentives to encourage international companies to set up holding companies or headquarters in Ireland.
The measures had nothing to do with attracting serious foreign direct investment but were about helping to create a handful of jobs for accountants and lawyers here, as well as having directors of large multinationals fly into Dublin once a month to make some decisions.
This was the point at which Ireland went beyond being intelligent and competitive at winning genuine foreign direct investment, and just tried to be too bloody smart and clever.
McCreevy's successor Brian Cowen built on the initial incentives around Capital Gains Tax and tax on foreign dividends in successive Finance Acts in 2005 and 2008. His last Finance Act saw him slash the tax rate on certain foreign dividends by 50pc. This eventually led to a flood of British companies looking to shift domicile to Ireland.
Several did and it created tension in 2008 with the British government.
Ireland was speaking out of both sides of its mouth. We wanted to assure the British these companies were only registering their head office here and not shifting lots of jobs, while trying to argue publicly that we weren't interested in brass plate investments that didn't come with real investment.
To understand what makes Ireland attractive as a location for these inversions you simply have to consult the experts. Law firm Arthur Cox has a detailed brochure outlining the benefits to US companies of doing their inversions in Ireland called 'Inversions to Ireland'.
The first benefit listed is our low 12.5pc Corporation Tax. It adds: "While dividends received by an Irish incorporated company are taxed at 12.5pc or 25pc, a flexible credit system usually eliminates any tax liability in Ireland on receipt. In addition, other tax-free cash repatriation techniques are available."
The second big plus for Arthur Cox is Capital Gains Tax (CGT) exemptions. These were the CGT exemptions introduced by McCreevy a decade ago, and added to by Cowen in subsequent Finance Acts.
Number three is no stamp duty for transfers of US ADRs, another exemption lobbied for and delivered by our policy-makers.
Other advantages listed portray Ireland in a very "light touch" kind of way when it comes to business legislation and regulation. These include: no "thin capitalisation" rules like the US; no controlled foreign corporation rules such as in the US, the UK or Germany; and limited transfer pricing rules.
Other benefits listed, which might not reflect well on our business culture when it comes to transparency and accountability, include: share buybacks don't need shareholder approval; no need for shareholders to approve the payment of dividends; Ireland allows what is called 'blank check preferred stock'. These are shares over which the board of directors has authority to determine voting, dividends etc. They can be used to prevent takeovers by placing them with board-friendly investors.
Another Irish "positive" given is the fact there is no binding or advisory vote and no legislation on the way allowing shareholders a "say on pay" for directors' remuneration.
The Arthur Cox brochure also highlights how, in Ireland, annual accounts only have to produce a total aggregate figure for directors' pay, loans, pensions and loss of office payoffs.
The Irish Government is talking about this issue as if it just fell out of the sky somewhere over Delaware and has very little to do with us. Yet Ireland has spent at least a decade, egged on by industry lobbying, putting together a framework of incentives that ended up facilitating inversions.
We have been caught out by going too far in the tax avoidance game, with high reputational risks for a handful of jobs for lawyers and accountants.
We say we don't want brass plates but our selective memory is definitely of the brass neck variety.