Fianna Fáil spokesperson on Finance Michael McGrath TD has called on the Government to move quickly to counter the impression being spread in the US that Ireland is engaging in unfair corporation tax practices.
He commented: “President Obama’s comments on so-called tax inversion where a US firm buys a European entity and moves its corporate headquarters to that country are simplistic in the extreme. He referred to Ireland in negative terms on a number of occasions and cites an example of a US company with 10,000 employees “saying we’re now magically an Irish company, despite the fact that you may only have 100 employees there”. I am not aware of any such transaction having taken place. In fact where inversions have occurred they have tended to be among large pharmaceutical companies, have significant commercial substance and substantial synergies have existed. In simple terms, the business case has to stack up before any transaction of this this type would take place. To claim that companies in such instances are motivated solely by tax considerations is completely misleading.
“Our corporation tax rules are in accordance with OECD guidelines on taxation and we need to be more proactive and make the case definitively for retaining autonomy on tax matters. The Government needs to communicate this clearly and counter any misinformation or confusion that exists in respect of how we apply our rules no matter where that source may be. To date they have not succeeded in putting our point across on this matter and it is causing unnecessary harm to our international standing.
“One of Ireland’s strengths has been the clear and consistent tax rules which are fairly applied in all circumstances. By contrast the US has a regime that is characterised by a high tax rate and a myriad of loopholes and tax breaks. This is the real cause of the problem which some in the US have tried to lay at Ireland’s door.”