Saturday 17 February 2018

Noonan resists pressure for a minimum rate of corporate tax

Gordon Deegan

FINANCE Minister Michael Noonan has ruled out a minimum effective corporate tax rate.

Mr Noonan has faced pressure to introduce a minimum rate following revelations that some companies here pay almost no tax of profits generated by their Irish subsidiaries. Any move to introduce a minimum tax rate would have caused huge dismay among US companies operating here.

Currently, firms operating in Ireland pay a corporate tax rate of 12.5pc although reliefs and allowances mean that firms' effective corporate tax rate can be much lower.

Recently, it emerged that a holding firm for medical device multi-national, Boston Scientific paid an effective corporate tax rate of 4pc when it paid tax of $60m on revenues of $1.4bn in 2011, while one Abbott Laboratories Irish subsidiary paid no tax on profits of $1.8bn in 2011, as it was not resident here in Ireland for tax purposes.

"Neither I, nor my Department, would be in a position to introduce a minimum 'effective rate' in Ireland in the way suggested," Mr Noonan told Labour Party deputy Brendan Ryan when questioned about plans for a minimum rate.

In his written Dail response, Deputy Noonan "I am aware of recent reports that claim that the rate of tax being paid by some companies operating in Ireland is lower than the headline rate of 12.5pc.

"The tax rates that are being quoted are, emphatically, not the rate of tax paid by such companies, or by any company, on their Irish activities."

He added: "All companies resident in Ireland are chargeable to corporation tax at the 12.5pc rate on the profits that are generated from their trading activities in Ireland."

"There are different ways of measuring the effective rate of corporation tax depending on the variables that are used.

"As there is no such single internationally agreed methodology to calculate the effective rate of corporation tax, there is no reliable basis upon which to calculate the current 'effective rate' of corporate tax in Ireland without being potentially misleading," Mr Noonan said.

Mr Noonan referred to a 2013 report by the World Bank and PWC that put Ireland's effective rate at 11pc and a separate 2011 European Commission report that indicates Ireland has an effective corporate tax rate which is close or indeed higher than the statutory 12.5pc.

Mr Noonan repeated his assertion that Ireland is different to other European countries.

"Some other countries have a high headline rate of corporation tax which is then supplemented by a high number of tax reliefs which reduce the overall rate of tax paid. By contrast, the approach in Ireland is transparent: we have a competitive headline rate of corporation tax which is applied to a broad base," he said.

The Finance Minister added that Ireland has relatively few tax incentives.

Irish Independent

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