Leaders' Questions (Continued)

Tuesday, 11 March 2014

Dáil Éireann Debate
Vol. 834 No. 1

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(Speaker Continuing)

[Deputy Joan Collins: Information on Joan Collins Zoom on Joan Collins] Was Apple able to avail of a rate lower than 12.5% between 2004 and 2009 and, if so, what rate was applied and who decided on this lower rate? We are all very aware that the loophole which allowed not just Apple but a range of large multinationals effectively to avoid tax will close from January next year. My question relates specifically to the returns made by Apple in Australia for the years 2004 to 2009 and its claim that it availed of a lower rate of tax in Ireland, a claim the Government has repeatedly refuted in the past year.

The Tánaiste: Information on Eamon Gilmore Zoom on Eamon Gilmore The issue of effective tax rates has been the subject of a number of public discussions in the past 12 months. It has been acknowledged by the OECD, the European Union and the G20 that international tax planning is an international issue, and the Government is working with these organisations to reach a solution.

The recent coverage of multinational profits by Apple was based on historical accounts from 2004 to 2009 which used a stateless company structure. We addressed the issue of stateless companies in budget 2014 and the Government is fully committed to the OECD base erosion and profit shifting, BEPS, project. The OECD is progressing that project, with the support of the G20, to deal with this international issue. There has been an allegation that Apple had some type of special deal with Ireland. We have consistently rejected that allegation. Indeed, Mr. Tim Cook, CEO of Apple, corrected the record in that regard in May last year when he stated at the All Things Digital D10 conference, "We have no special deal with the Irish Government".

With regard to the allegation that Apple paid only $36 million of tax on profits of $7.11 billion, it is important to clarify that there are two separate scenarios that are often confused in discussions on the effective rate of corporation tax. The first is the global rate of tax that is paid by multinational companies which operate across a number jurisdictions. This is a blended rate which takes into account the amount of tax charged across all countries in which a company trades, not just in Ireland. The extremely low effective rate figures that were recently quoted in Apple's case and attributed to Ireland are based on a flawed premise. They are estimated by dividing the amount of Irish tax paid by a total profit figure that includes substantial profits made by companies that are not tax resident in Ireland. The figures are running together the profits earned by group companies in Ireland and in other jurisdictions and incorrectly suggesting that Irish tax does or should apply to both.

Ireland cannot tax profits that are properly attributable to other jurisdictions. The ability of some multinationals to lower their worldwide rate of tax using international structures reflects the global context in which Ireland and all other countries operate. The best way to address this issue effectively is for countries to work together at international level. The appropriate action is being considered in this regard by the OECD as part of its project on base erosion and profit shifting. Ireland is participating fully in that process.

The second issue is the effective rate of tax applying in individual countries. The domestic rate of tax paid in Ireland is within the control of the Irish tax system, and Ireland is responsible for the amount of Irish corporation tax that is charged here. All companies operating in Ireland, both domestic businesses and multinationals, are chargeable to corporation tax at the 12.5% rate on the profits that are generated from their trading activities here. A higher 25% rate applies in respect of investment, rental and other non-trading profits as well as certain petroleum, mining and land-dealing activities. Chargeable capital gains are taxable at the capital gains tax rate of 33%. Some other countries have a higher headline rate of corporation tax, which is supplemented by a high number of tax reliefs that 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.

Deputy Michael Healy-Rae: Information on Michael Healy-Rae Zoom on Michael Healy-Rae Gobbledegook. Fair dues to whoever wrote that response.

An Ceann Comhairle: Information on Seán Barrett Zoom on Seán Barrett Will Deputy Healy-Rae stop interrupting other speakers in the middle of Leaders' Questions?

Deputy Michael Healy-Rae: Information on Michael Healy-Rae Zoom on Michael Healy-Rae It is the truth.

An Ceann Comhairle: Information on Seán Barrett Zoom on Seán Barrett I do not care whether or not it is the truth. Deputies are not to interrupt.

(Interruptions).

Deputy Patrick O'Donovan: Information on Patrick O'Donovan Zoom on Patrick O'Donovan I would like to hear Deputy Healy-Rae say that to the Kerry Group.

An Ceann Comhairle: Information on Seán Barrett Zoom on Seán Barrett I have called Deputy Joan Collins. Other Members were given silence when they were speaking; they should afford the same to Deputy Collins.

Deputy Joan Collins: Information on Joan Collins Zoom on Joan Collins Whoever wrote the Tánaiste's reply seems to have lost the plot halfway through. The fact of the matter is that Apple Sales International's returns in Australia show that it was able to cut its tax bill by availing of lower rates of tax on income, which was a reference to the 12.5% tax on corporate profits in Ireland. Something does not add up here. The Tánaiste cannot on the one hand say there is no such thing as reduced rates and, on the other hand, that there is, in fact, some way in which companies can get around it.

It is quite evident what is happening here - €36 million was paid by Apple to the Irish Exchequer. That money has to have come from somewhere and it did not come from the 12.5% corporation tax. The company is not domiciled in Ireland for tax purposes, so why was that sum paid? The Tánaiste's answer is not good enough and it does not add up. Someone is telling porkies here. The Tánaiste and Apple management should get together and present a proper response to this question.

Deputy Richard Boyd Barrett: Information on Richard Boyd Barrett Zoom on Richard Boyd Barrett Apple management should be brought into the finance committee.

Deputy Joan Collins: Information on Joan Collins Zoom on Joan Collins Yes, Apple representatives should come before the finance committee.

Deputy Patrick O'Donovan: Information on Patrick O'Donovan Zoom on Patrick O'Donovan People over there should look to their own tax affairs.

Deputy Joan Collins: Information on Joan Collins Zoom on Joan Collins A Cheann Comhairle, I have been accused of not having my tax affairs in order.

Deputy Patrick O'Donovan: Information on Patrick O'Donovan Zoom on Patrick O'Donovan I was referring to the tax affairs of the Technical Group.

Deputy Joan Collins: Information on Joan Collins Zoom on Joan Collins There is nothing wrong with our tax affairs. I refute that remark and the Deputy should not be able to say it across the floor of the Dáil.

Deputy Patrick O'Donovan: Information on Patrick O'Donovan Zoom on Patrick O'Donovan Is all the VAT paid?

Deputy Finian McGrath: Information on Finian McGrath Zoom on Finian McGrath That is an outrageous remark and Deputy O'Donovan should be made to withdraw it.

An Ceann Comhairle: Information on Seán Barrett Zoom on Seán Barrett I ask Deputy O'Donovan to resume his seat.

(Interruptions).

An Ceann Comhairle: Information on Seán Barrett Zoom on Seán Barrett Will Deputy O'Donovan mind his own business and stop causing problems in the Chamber?

Deputy Patrick O'Donovan: Information on Patrick O'Donovan Zoom on Patrick O'Donovan I am sorry, a Cheann Comhairle.

(Interruptions).

An Ceann Comhairle: Information on Seán Barrett Zoom on Seán Barrett There are a lot of pretend comedians in the House today.

Deputy Finian McGrath: Information on Finian McGrath Zoom on Finian McGrath Will the Ceann Comhairle ask Deputy O'Donovan to withdraw his remark?

An Ceann Comhairle: Information on Seán Barrett Zoom on Seán Barrett I ask Deputy McGrath to resume his seat.

Deputy Finian McGrath: Information on Finian McGrath Zoom on Finian McGrath It is outrageous.

An Ceann Comhairle: Information on Seán Barrett Zoom on Seán Barrett Deputy McGrath is constantly interrupting. I have dealt with the issue.

The Tánaiste: Information on Eamon Gilmore Zoom on Eamon Gilmore The position on corporation tax is very clear. We have a 12.5% rate of corporation tax. It is statute-based and applies to profits that are earned in Ireland. It is applied consistently. We did have a problem with the issue of the stateless company. The Government recognised that loophole in our tax system and, last October, when we brought in the budget for 2014, we addressed and resolved it by ending the concept of stateless companies.

There is an international issue around corporation tax whereby multinational companies which operate across a number of jurisdictions are able to plan their tax affairs in a way that minimises their tax contribution globally. This is an issue that has to be tackled on an international basis. The OECD, of which we are a member, is working on it by way of the base erosion and profit shifting project it undertook some time ago. Ireland is participating in that project, which has the support of the G20 and the European Union. This is a problem that has to be addressed at an international level. I was at the OECD only a few weeks ago, along with the Taoiseach and other Ministers, where we discussed the progress that is being made on this issue. We want to see this issue addressed at a global level, and the appropriate body through which it can be addressed is the OECD. That organisation is making progress and we are working with it to that end.

Deputy Richard Boyd Barrett: Information on Richard Boyd Barrett Zoom on Richard Boyd Barrett In other words, the Government will continue protecting the multinationals.


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