The Dublin-headquartered pharma giant Shire, one of a number of British firms to shift their base to Ireland in 2008 to avail of the Republic's favourable corporate tax regime, has denied that its taxation strategy has damaged its reputation.
Speaking at an AGM in Dublin at which board members outnumbered shareholders, outgoing chairman Matthew Emmens said the company "was not Starbucks" .
“We are an international company. We do pay our taxes and we stay legal,” he said.
“Reputation counts both in terms of to the community and to shareholders. I have a lot of allegiance to shareholders and in finding the best way possible to balance those two issues and I believe we have done that,” he added.
Mr Emmens was among a number of board members who responded to an individual shareholder who had posed questions as part of a project by responsible investment campaign ShareAction and Christian Aid.
At the end of the AGM, Mr Emmens was replaced as chairman by Susan Kilby. She said the company reviewed its tax position on an annual basis and took note of issues such as reputational risks arising from its taxation strategy.
“We look at the issues around the world and evaluate whether it makes sense to maintain our position in the current jurisdiction or make any changes and we have done that this year,” she said. “We have decided this is the appropriate configuration for Shire at this time.”
The company’s new chief financial officer James Bowling said the company commended the UK government for changes made to their tax policies since 2009. He added that Shire continued to look at what was best for the business in terms of location. “At this point we see no reason to change our current position,” he said.
Consultation process
Separately, the Department of Finance has begun a consultation process to examine how the Irish tax system affects developing economies, particularly in Africa.
The so-called ‘spillover analysis’ will focus on a number of areas including existing tax treaties with other countries, the consequences of Ireland’s corporation tax rate on low-income economies, and ways in which the country could help other nations to improve how they collect taxes.
Research carried out by Christian Aid indicates that developing countries lose an estimated$160 billion dollars each year because of international tax dodging - a figure which is much higher than those countries receive in overseas aid.
A report commissioned by the Dutch government on the effects of its corporate tax policy on developing countries, which was published last November, concluded that aspects of its tax system could have a negative impact on them.
However, while national tax issues are increasingly coming under the spotlight, research into how one country’s policies can affect those of another have been limited. It is hoped that by launching its own consultation process on the issue, Ireland could become a leading advocate for the approach at an international level.
The department's decision to launch a consultation also coincides with moves elsewhere. The International Monetary Fund (IMF) launched its own consultation on tax spillover last month. The Organisation for Economic Cooperation and Development (OECD) is also involved in a project that is investigating how multinationals end up paying less tax than individuals through base erosion and profit shifting (BEPS) strategies.
Christian Aid, which had lobbied the Government over the issue of Irish tax policy on developing economies, welcomed news of the consultation process.
“Continued focus on Irish tax policy and the role Ireland plays in facilitating large-scale tax avoidance by multinationals makes it imperative that we are seen to be doing all we can to ensure that we are not depriving poor countries - many of which are Irish Aid programme countries - of badly needed revenue,” said its head of advocacy Sorley McCaughey.
