Ireland’s tax take from US multinationals outstrips France and Germany – IRS

Ireland collected $7.9bn of tax from US multinationals here

Tax take: Economist Seamus Coffey said the US system has been a sieve for years. Photo: Daragh Mc Sweeney/Provision

Donal O'Donovan Twitter Email

April 21 2021 02:30 AM

US multinationals paid more tax in Ireland in 2018 than any other country – bar the US itself and Britain – according to data from the American Inland Revenue Service (IRS).

The $7.9bn of tax US multinationals paid Ireland in 2018 was more than they paid Germany ($4.9bn) and France ($2.65bn) combined.

The data shows that Ireland is a major tax collector in global terms despite a relatively low 12.5pc corporation tax rate and repeated accusations of functioning as a tax haven for multinationals.

"The US tax system has been a sieve for 40 years, leaking tax, and a more of that has been flowing to Ireland,” said economist Seamus Coffey.

"Ireland wanted the US multinationals here for the investment and the jobs, the irony is we’re getting the tax too.”

The IRS published aggregate data based on country-by-country reporting by US multinationals themselves of the amounts of corporation tax they paid around the world.

The most recent data, for 2018, shows US multinationals paid $141bn (€117bn) in tax at home in America, by far the most paid in any jurisdiction followed by the UK, which collected $10.9bn from US multinationals with operations there.

Despite the tiny size of the economy here in global terms, Ireland collected $7.9bn of tax from US multinationals here.

That cash Ireland collected from multinationals is dramatically more than bigger EU economies including France and Germany took in.

Senior political figures in both of those countries, as well as in Brussels, have long been critics of Ireland’s approach to taxing multinationals like Apple, Google and Pfizer, including widespread claims that Ireland is a tax haven – a view shared by senior figures in US President Joe Biden's administration.

The US, alongside France, is now pushing for changes that would lift their own tax take from multinationals at the expense of small countries including Ireland.

Ireland’s status as a major tax collector follows big global tax reforms of the last decade like the OECD-led effort to address base erosion and profit shifting (BEPS). It mean less of the worldwide profits of US firms are flowing to no-tax jurisdictions like the Cayman Islands and Bermuda where profits often sat offshore for years, and instead are flowing to Ireland as taxable profits, Mr Coffey said.

Ironically, that means the US may be collecting tax earlier from multinationals but is getting a smaller overall share of the tax paid because any tax paid in Ireland and other tax jurisdictions can be deducted from multinationals’ overall tax bill.

The IRS figures show 53pc of the corporation tax paid by US multinationals was paid at home, with the rest going to countries where firms operate.

In 2018, relative to the size of the Irish economy, the corporation tax collected from US firms here is actually bigger than the benefit the US gets from taxing its multinationals, according to Mr Coffey.

The scale of tax paid by US firms here has only increased since 2018. In 2020, corporation tax paid here was a record €11.8bn, mostly collected from US multinationals.

The US collects a relatively small 0.65pc of its gross national income (GNI) by levying corporation tax on multinationals, versus around 2.5pc of GNI here.

In the Oireachtas yesterday, Finance Minister Paschal Donohoe said the amount of tax Ireland collects is set to change as a result of the corporate tax proposals being pushed by the Biden White House.