Ireland is losing its tax profits because of US multinationals

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irelandAccording to the Oireachtas Committee, up to €40 billion (it’s almost half of the annual profits made by the companies registered in Ireland) fall outside the corporate tax net because many multinational subsidiaries in Ireland declare that they are tax residents elsewhere. ‘Many US multinationals pay tax where it suits them’, said Jim Stewart, an Associate Professor of Finance at Trinity College Dublin who studies the tax avoidance practices of multinationals. ‘If you put your name on a shoebox somewhere for six months, you can get your tax residency there,’ said Dr Stewart. He examined the figures for the year 2011 and came to the conclusion that about €83 billion of ‘profit-type’ earnings were attributable to Irish companies that year. He considers to be unreasonable the fact that if an Irish company is deemed to be controlled from abroad, it is not tax resident in Ireland and its foreign income cannot be taxed, taking into consideration that all worldwide income of indigenously controlled companies is subject to Irish corporation tax. Dr Stewart, who has previously estimated that Ireland’s effective corporation tax rate is about 3.8 per cent, added: ‘I estimate that up to €40 billion (of the €83 billion) is the profits of US multinationals incorporated in Ireland, but which are controlled or managed elsewhere.’