Ireland is emphatically not a tax haven, according to the head of the tax division of the Organisation for Economic Cooperation and Development.
The comments from Pascal Saint-Amans come in the wake of accusations made in parliamentary committees in both the US and UK that large global companies use Ireland as part of their efforts to pay minimal amounts of corporation taxes in any jurisdiction.
Speaking via video-link to the Oireachtas joint subcommittee on global taxation, Mr Saint-Amans added, however, that Ireland could take unilateral action to curb avoidance by, for instance, having stricter rules on corporation tax for companies formally resident in Ireland.
Irish action praised
He also praised the Irish authorities for their "very active" efforts in supporting changes to multilateral taxation rules which would lessen incidences of companies avoiding the payment of corporation tax.
Mr Saint-Amans said the objective of the new rules was to ensure as far as is possible that profit taxes are levied in the jurisdictions in which the profits are generated.
Committee member Richard Boyd Barrett contested Mr Saint-Amans's view that Ireland was not a tax haven.
He said that, if that were the case, terms such as the “double Irish” would not exist, referring to a tax-avoidance practice of multinationals. In response the OECD official said that companies were able to “play on” existing national and international tax systems to exploit loopholes.
Mr Saint-Amans also warned of the risk of some countries opting out of the international regime if they came to believe that that was the best way to protect their tax bases.
Such a development would be damaging to global economic growth, he added.
Last week, the OECD presented a report on the matter to the Group of 20 states in Moscow. The G20, which includes all of the world's largest economies, has become in recent years the pre-eminent forum for addressing global economic policy challenges.
Tax-avoidance targeted
Mr Saint-Amans told the subcommittee that the G20 had fully supported the 15-point plan put forward by the OECD as a means of curbing tax avoidance.
The new rules are expected to be agreed and put in place next year.
Mr Saint-Amans said that, although this was a tight schedule, he believed it would be met owing to much-increased pressure from OECD member states and others for loopholes to be closed down.
He added that this increased reform momentum had come about owing to the widespread economic crisis over the past half decade and the need for governments to ensure tax revenues are maximised in a time of austerity.
When he was asked about which countries would gain from the new rules and which countries might lose out by them, Mr Saint-Amans said that he was unable to answer that question.
