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How Ireland became one of the World’s biggest tax havens

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Dr Brian O'Boyle with his new book.

Dr Brian O'Boyle with his new book.

Dr Brian O'Boyle with his new book.

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“A report from 2018 showed through statistics that Ireland was the biggest tax haven in the world in 2015, it had more tax evasion and avoidance than all the Caribbean islands put together.”

These are the words Brian O’Boyle, an economics lecturer in St Angela’s college, who together with sociologist Kieran Allen has written Tax Haven Ireland, a book exploring Ireland’s role as one of the world’s major tax havens.

“There wasn’t a full-length book treatment of the Irish tax haven in print, so we felt it was important from an exposé point of view but also as a social analysis to really shine a light on the Irish economy,” Brian said.

The duo had previously written a book called Austerity Ireland dealing with “the failure of Irish capitalism and the response of this country’s elites to the impending housing and banking collapse”.

“It became clear to us there was a bigger story to be told about the true nature of Irish capitalism and the tax haven that was increasingly obviously the centre point of the whole thing,” he said.

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The new book looks at the history of the Irish economy, investigates the mechanisms used to create it, examines the role of multinational corporations, law firms as well as the property sector, and demonstrates the social cost and consequences of Ireland’s tax laws.

“You have the European commission, all the serious tax academics, and all the tax justice organisations saying that Ireland is a tax haven and yet all of official Ireland continue to deny it,” he said.

“In a way that undermines our democracy, so we want to make sure the truth is actually out there. In the end tax avoidance hurts everybody.

“If you look at our GDP per capita we have one of the highest in the world. It looks like we are one of the richest countries, but then if you look at our health service, pupil-teacher ratios, cost of childcare, or our record on environmental measures, Ireland comes near the bottom of those lists because we have a very small public sector and the reason for that is because we are a tax haven.

“We are encouraged in this country to feel like the tax policies we have implemented are essential for us, you have this strange dynamic where school kids know that companies pay 12.5% corporation tax but they have no idea what they will pay when they’re older.

“There is this myth that we are 100% reliant on multinationals and yes, it is true they have brought investment and are responsible for around 7% of jobs in the State, but they have also caused an enormous race to the bottom internationally. They have eroded corporate responsibility and that makes it much more difficult to hold them to account.”

Brian claimed the history of corruption and cronyism in Ireland dates back to the 1950s when policies first implemented by figures such as T.K. Whitaker and Seán Lemass, as well as later tax scandals which “included Charles Haughey and a whole series of politicians” led to the development of Ireland’s reputation as a “corporate friendly place” that offers huge tax breaks to multinational corporations.

“There has been a past dependency and the further you go in this area the worse it gets and the more likely you are to build your whole industrial policy around tax evasion,” he said.

The book explores how legislation allowing US companies to avoid corporate tax in Ireland had been active in the country for decades.

The Double Irish tax tool first used in the late 1980s was the largest tax avoidance tool in history and by 2010 it was shielding $100 billion annually in US multinational foreign profits from taxation.

“They write to the American government and say we are incorporated in Ireland, that allows them to avoid American taxes, then they write to the Irish government and say our command and control decisions are happening in the Bahamas,” he said.

“That allowed them to bounce the profits from Ireland, like a trampoline, into known tax havens. Ireland acted as a middleman or stop point on the way out.”

This loophole was closed in the wake of the European Union investigation which led to Apple being ordered to pay the largest corporate tax fine in history, €13 billion, plus interest, in unpaid Irish taxes on €111 billion of profits, a ruling that is still in the appeals process with the Irish government highly reluctant to accept the money.

Brian claims that after this the State started to “adjust its primary tax avoidance mechanism” and has created a different system where corporations can deduct huge amounts of taxes through invoicing “intellectual property” such as “software, logos or a part of their brand” that is very difficult to value.

“They tell the tax authorities it is very expensive and that allows them a deduction in their taxes against anything that costs them money. They can say they have a €320 billion assist and any profits that comes up to €320 billion can be written off against that investment, an investment that was basically created by themselves,” he said.

While a lot of people might feel like these issues have no bearing on their lives, Brian highlighted the strong link between Ireland’s tax policies and the current housing crisis.

“The centre point of the collapse in Ireland was the housing market because Ireland had traditionally relied on foreign direct investment, a lot of Irish wealth was in housing and property,” he said.

“The first time they stabilised the system through NAMA which was relatively effective to stop the bleeding, putting a floor underneath the collapse and the prices but they were never going to be able to revive the prices on their own.”

Freedom of Information requests reveal that throughout the 2010s there were dozens of meetings between the Department of Finance and representatives of international property funds and “after that you get this sequence of investment funds that are declaring quite high profits in the Irish with very low taxes.”

“Effectively you can legally separate a parent company from a secondary company.

“The secondary company buys the property, makes the profit, and pays interest to the parent declaring the interest as a cost and then uses that as a deduction.

“They then began to partner with existing developers in Ireland and on many occasions they held onto the land because they wanted to artificially increase prices, what they effectively did was hold back supply in the State.

“The implication is we have a huge housing crisis and there is very little building happening in the State.

“In the final year of the Celtic tiger there were 96,00 houses built; they haven’t gotten past 25,000 in the last number of years.”

Brian feels “we are in a very important moment in the world” with “runaway climate omissions and over 100 tax havens in the world” that there “needs to be a discussion internationally around what kind of future we want”.

“If we had a 50% global corporation tax It would undermine the logic of having any tax havens in the world.

“They couldn’t play countries off one another and erode regulations and labour standards, and effectively corporations could be held to account,” he said.

“It’s about time people had a chance to understand the downsides of our tax policies, then we can have a democratic open discussion about whether or not we think it’s a good idea.

“When an investment happens it’s all over the news but when €10 billion is avoided in taxes that’s not on the news. It is important that we have some transparency and accountability.” Tax Haven Ireland by Brian O’Boyle and Kieran Allen is available for purchase from Liber bookshop, O’Connell Street, Sligo.


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