THE government has serious questions to answer as a large pharmaceutical company is still exploiting a corporate tax loophole that is believed to have closed in 2018, it has been alleged.
TDs expressed outrage over allegations that Abbott was using sophisticated tax structures in Ireland and Malta to legitimately avoid paying millions in corporate income taxes.
Pharma fim Abbott developed a Covid-19 rapid test for patient smears last yearPhoto credit: AP: Associated Press
Sinn Fein TD Pearse Doherty would like responses following reports that the ‘single malt’ structure is still in usePhoto credit: PA: Press Association
This resulted in an analysis of corporate structures and published invoices from the Christian Aid charity.
They claim the pharmaceutical company is using what is known as the “single malt” structure – which the Irish government abolished two years ago – to avoid paying corporate tax on € 477 million in intellectual property-related profits for its rapid diagnostic tests, including Covid-19 test.
Abbott said it pays “all of its taxes owed in every country it operates in worldwide” and has “never used the single malt structure.”
But the company’s latest available accounts, viewed by Christian Aid, show Abbott channeled € 31 million in profit to € 65 million in revenue in 2019 through a “single malt” structure.
Sinn Fein TD Pearse Doherty called for answers from Finance Minister Paschal Donohoe – who had previously promised the Oireachtas to close the tax avoidance structure.
Deputy Doherty said: “The Finance Minister claimed that this structure was closed in late 2018 with the signing of an agreement between the tax authorities and the Maltese tax authorities.
“These revelations blast a hole in the effectiveness and functioning of this agreement.
The Donegal TD continued: “The Treasury Secretary has serious questions to answer.
“He must address the results of this investigation and clarify whether he or any of his officials had known about the use of such tax regimes by a company since 2018.”
Deputy Doherty also said the minister needed to clarify whether he had any contact with the tax office or the Maltese authorities regarding the existence of such tax structures.
These demands were taken up by TD Ged Nash of the Labor Party, who described the tax relief process as an “elaborate package game”.
The Louth TD also asked the Revenue Commissioners “to clarify what knowledge they have of the agreements” and whether they know that other companies in Ireland “use these types of structures”.
RADICAL REFORMS NEEDED
In 2018, the Treasury Secretary refused to allow Ireland to sign the OECD’s efforts to fully combat tax avoidance programs and instead chose to sign an agreement with the Maltese government.
Green Party TD Deputy MP Hourigan said it was time for Ireland to push through radical corporate tax reforms.
She said, “We cannot continue to ply patch by patch trying to correct Ireland’s role in international corporate tax avoidance.
“Instead of Ireland lagging behind in the OECD tax reform talks, Minister Donohoe must push for more radical reforms.”
So far, 130 countries and jurisdictions have joined forces on the OECD’s global tax reform plan, which aims to ensure that multinational corporations pay a fair share of taxes wherever they operate, including the introduction of a minimum corporate tax rate of 15 percent.
Finance Minister Paschal Donohoe had previously informed the Oireachtas that the tax avoidance structure had been closedPhoto credit: PA MEDIA