While speaking to the subcommittee on global taxation of the Parliament of Ireland, Frank Barry, a leading national economist and the Chair of International Business and Economic Development at Trinity College Dublin, denounced international accusations that Ireland’s tax system facilitates excessive tax avoidance for multinational businesses, saying that such claims are tantamount to nothing more than political “grandstanding”.
Frank Barry’s comments came as a repose to the recent launch of an inquiry by the European Commission on the alleged special tax deals given to large multinational corporations by the governments of Ireland, the Netherlands, and Luxembourg.
Frank Barry explained that despite the claims of special tax treatment, Ireland is not a “tax haven”, and any possible tax changes have the effect of tarnishing the country’s reputation for stability.
He also said that other countries in the EU are currently poised to take advantage of any alterations and adjustments made to Ireland’s tax system, and they will not hesitate to make appropriate changes in their own regimes in order to attract investors away from Ireland and to take advantage of “any leeway that we give them”.
As an example, pointed to the UK’s patent box regime, which allows businesses to pay a lower tax rate if they are engaged in innovative research activity, and he went on to say that “…I believe already we have lost some companies to the UK who are exploiting that.”
Frank Barry also addressed a recent report by the World Bank which claimed that the effective tax rate in Ireland may be as low as 6.5 percent, saying that the results were mere “bank of the envelope calculations”, and the actual effective tax rate in Ireland is between 11 and 12 percent.