Noonan's reply to questions on Double Irish 'embarrassing' - Carthy
Sinn Féin MEP Matt Carthy has labelled as "embarrassing" the reply of Irish Finance Minister Michael Noonan's to questions regarding the Double Irish tax avoidance scheme during a hearing today in the European Parliament.
Minister Noonan appeared before a hearing of the European Parliament's Economic and Monetary Affairs Committee in Brussels this afternoon, Tuesday, where he responded to Carthy's questions on tax avoidance by urging the Sinn Féin MEP to "wear the green jersey".
Speaking following the hearing, Carthy said:
“I questioned the Minister about the fact that the Double Irish remains in place for companies until 2020, and in fact indefinitely for countries that use a loophole in Ireland's tax treaties.
“This was an opportunity for the Irish Finance Minister to make a commitment in front of the European Parliament that he would take action to end the use of this notorious loophole.
“Instead, he took us back to the days of boom-and-bust Fianna Fail governments, where to dare to point out the unsustainable nature of our economic model was practically heresy.
"In a predictable but truly embarrassing response, the Minister failed entirely to address the question of how these treaties are facilitating tax avoidance, and whether he will commit to revise their terms.
“He instead implied that Irish political representatives shouldn't dare criticise the Irish government on this issue – that it's somehow unpatriotic to suggest that the Irish state should try to repair its international reputation by closing loopholes for tax cheats."
Addressing the Issues he raised with the Minister, Carthy said:
“The government announced the Double Irish was to be phased out for new companies from last year – but left it in place for companies already using it until 2020.
“There is simply no justification for tolerating massive tax avoidance by multinationals in this way for five full years.
"Just how many billions from its non-US sales will Google, for example, be able to shift to Bermuda before 2020?
“But leaving aside the long phase-out period, another, under-reported, loophole allows the Double Irish to stay fully in place for many companies beyond 2020. This loophole can be found in Ireland’s extensive network of double taxation treaties.
“The law was changed so that from January 2015, new companies being incorporated in Ireland would be Irish-resident for tax purposes by default, getting rid of the loophole that allowed companies to be tax-resident offshore if they claimed that’s where they were managed and controlled.
“But Ireland’s tax treaties override domestic law – and under several tax treaties, a company resident in both Ireland and a country it has a treaty with will still have residency determined according to the 'management and control' rule.
“I have reviewed Ireland’s tax treaties to examine which of these allow the Double Irish structure – and the results are alarming. The treaties that allow the Double Irish to continue in place beyond 2020 include tax havens and secrecy jurisdictions such as Panama, Malta, Hong Kong, the United Arab Emirates, the Netherlands and Belgium.
“So if a company is incorporated in Ireland, and routes its sales through Ireland, but claims it centre of management is one of these states, they can use the 'Double Irish'.
“Every euro in tax avoided through this mechanism is money denied to the Irish people that will have to be recouped by additional domestic taxes or reduced public spending.
“The simple, and patriotic, solution to this problem is for Irish government to legislate to bring an immediate end to the Double Irish and closing the remaining treaty loophole by committing to revise these tax treaties.”