O'Keeffe confirms support for tax rate

MORE THAN 75 multinationals have invested in Ireland this year, according to Minister for Enterprise Batt O’Keeffe, who reiterated the Government’s “unambiguous” commitment to the 12.5 per cent corporation tax rate.

Mr O’Keeffe said “that commitment is protected in an EU context by the principle of unanimity in taxation matters. And it is further enhanced by the insertion of a legal guarantee in the Lisbon Treaty.” He said “foreign direct investment to Ireland is now back at investment levels not seen since 2005/2006”.

Mr O’Keeffe told the Dáil that “some countries have high nominal rates of corporation tax but much lower effective rates due to the use of various base-narrowing devices. This is not the case in Ireland – our system is relatively simple. Corporation tax receipts in Ireland represent about the average collected by such taxes across the OECD.”

Fine Gael finance spokesman Michael Noonan, who introduced the Private Member’s motion, said the supposed threat to the corporation tax rate was “an invention by the Minister for Finance ... so that a victory could be claimed by the Government when the 12.5 per cent was not touched”. He said he had asked EU commissioner Olli Rehn about it “and he said ‘rates of taxation are matters for the sovereign Government’, which indicated that the Commission was not putting any pressure on”.

Mr Noonan said the corporate tax rate was a deliberate incentive introduced by the Government. There used to be a 10 per cent tax rate but that came under pressure and in the rainbow coalition negotiated the 12.5 per cent rate. The origins of the 12.5 per rate “are shared by Fine Gael, Labour and Fianna Fáil. When the tax rate came under pressure, I thought it would be important to reaffirm our commitment, across party lines, to the 12.5 per cent rate.” Sinn Féin spokesman Aengus Ó Snodaigh said “we oppose all diktats from the IMF and Brussels, whether that has to do with destroying our public services or raising corporation tax”. He said that as far as he was aware “no party here currently advocates raising the rate of corporation tax. Why then waste time in the middle of an unprecedented economic calamity to have us all say what everyone knows already?”