Ireland is not a tax haven and the State should be cautious in taking unilateral action to appease those who criticise its corporation tax regime, according to Frank Barry, professor of international business and development at Trinity College Dublin.

Speaking to the Joint Oireachtas Subcommittee on Global Taxation, he described recent comments at a US senate committee hearing on Ireland’s tax regime as “Alice in Wonderland language”. Members of the committee were “grandstanding”, he said.

Prof Barry described a World Bank study on effective global corporate tax rates as “rubbish”. He said that study had been done “on the back of an envelope”. In that study, Ireland’s effective corporation tax rate was far below the headline rate of 12.5 per cent.

Effective rates
Prof Barry said that a much more accurate study of effective rates had been conducted by Mike Devereux of Oxford University. His research found that Ireland's effective rate was 11.1 per cent, much closer to the headline rate.

Asked what kind of unilateral action Ireland could take to counter charges that it was eroding the global tax base, Prof Barry counselled caution as other countries are “hovering” to attract firms who might disinvest here.

As to why the European Commission had recently launched investigations into a number of member states’ corporation tax regimes he suggested that the commission’s loss of influence over the past half decade may have left it struggling to find a role for itself.