More sophisticated line on tax needed

There is a strong defence which can be put up in relation to the Apple tax case – and on the wider issue of Ireland’s corporate tax structure. But it is not represented by the statement made on Wednesday by Minister for Jobs Mary Mitchell-O’Connor in the Dáil debate.

The Minister’s speech carried all the old clichés. Ireland would “stand by our 12.5 per cent corporation tax rate”. Multinational companies here make “real goods and provide real services”. It is “cut-throat out there” when Ireland goes to attract foreign investment.

All these statements may be true. But they have little to do with the real debate on what happened in the Apple case, or where we should go next.There was, for years, a kind of duality to multinational investment here.

Major companies put in massive investment, but alongside this they created sophisticated financial structures which were a part in an international chain of tax avoidance.

A more sophisticated line or argument is needed to combat criticisms of Ireland – and to plot a way for the future. There is little point trotting out the old line about the 12.5 per cent rate when it is not the issue – the issue is the mechanisms put in place to avoid paying this rate on much of the income moving through Ireland.

Ireland’s case needs to be based on a few fundamentals. We collected all the tax that was legally due here. Much of the problem relates to the US tax system.

We have removed, or are removing, some of the more aggressive tax planning devices here. And we fully support the moves to co-operate with other countries to limit the ability of multinationals to legally avoid tax in future.

Combined with a robust legal challenge to the Apple ruling, these lines provide a credible way forward for Ireland. Of course we need to recognise the importance of multinational investment and fight to attract more.

However, to succeed here we need to put up a case internationally that Ireland’s corporate tax regime has changed, and will continue to evolve and will be solid for the future. Pretending that everything has always been perfect is not the place to start.