&Irish TAX POLICY
Tax revenue plays a critical role in enabling States to realise the economic, social and cultural rights of children such as the rights to education and healthcare. But developing countries now lose at least $170 billion every year to tax avoidance. For example, an estimate for 2013 puts foregone tax revenue for Ghana due to corporate tax abuse at US$340m. According to a tool developed by researchers at the University of St Andrews, a US$340m increase in Ghanaian government revenue in 2013 could have prevented 170 child deaths.
Ireland is one of the world’s biggest facilitators of tax avoidance. Its role has been noted by EU institutions, bodies within the US Congress and academics. A recent NBER working paper found that in 2015, more than 40% of multinational profits were shifted to tax havens – and that Ireland was the ‘number one’ profit shifting destination.
IRELAND'S TAX POLICY
Ireland facilitates tax avoidance through several complex aspects of its tax law. These include extensive reliefs and allowances on profits related to intellectual property (IP). For example, when tax on IP-related income was reduced to 0% in 2014, Apple are believed to have moved over $240bn of IP to Ireland, allowing the company to shield €27bn in non-US profits from tax in one year alone.
Another notable aspect of Irish tax policy is its approach to negotiating tax treaties with developing countries. It is well-known that when countries in the Global South enter into tax treaties with tax havens like Ireland, they lose out on revenue. But Ireland is nonetheless seeking to expand its network of such treaties in Africa. In 2018, it aggressively negotiated a tax treaty with Ghana, going over the heads of the expert negotiating team to lobby the Minister of Finance directly.
As well as enabling tax avoidance through its own policies, Ireland has also actively undermined international efforts to reduce tax injustice. For example, Ireland has refused to support the establishment of a UN taxation body, a measure which is necessary to enable the creation of an equitable global tax system. Ireland has also opted out of a key provision of an OECD tax instrument designed to prevent corporate tax avoidance.
Tax and Human Rights
Poorer countries lose billions of dollars annually due to corporate tax avoidance, undermining their ability to realise children’s rights, such as the right to healthcare or education.
Ireland is a major facilitator of corporate tax avoidance, and has been identified as the number one destination for profits ‘shifted’ by multinationals.
In November 2020, the UN Committee on the Rights of the Child agreed to examine the impacts of Ireland’s tax policies on the rights of children abroad as part of its “periodic review” of Ireland’s compliance with the Convention on the Rights of the Child. It did so in response to a submission made by a coalition of NGOs including GLAN.
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Christian Aid Ireland
Integrated Social Development Centre (ISODEC)
Tax Justice Network
Tax Justice Coalition
The UN human rights treaty monitoring bodies periodically review whether states are complying with the various human rights treaties they have ratified. Ireland’s compliance with the Convention on the Rights of the Child is coming up for review by the UN Committee on the Rights of the Child in 2021. In 2020, an international coalition of NGOs, which included GLAN, made a formal submission asked the UN Committee to investigate Irish tax policy.
The Convention on the Rights of the Child requires Ireland to respect, protect, and fulfil the rights of children who are affected by its actions. This includes children beyond its borders. By actively undermining the ability of developing countries to raise revenue through its encouragement of corporate profit-shifting, and by opposing international instruments that would tackle tax injustice head-on, Ireland is in clear breach of its obligations under the Convention.
In November 2020, the Committee accepted our arguments and asked Ireland to explain what it is doing to ensure that its tax policies ‘do not contribute to tax abuse by companies operating in other countries’. Ireland will have an opportunity to respond to the Committee by October 2021 before it adopts its concluding observations and recommendations the following year.
After the Committee accepted our concerns, an updated submission was filed in August 2022. During a January 2023 hearing in Geneva, Committee members questioned Ireland on its tax policies, particularly raising points we had emphasised in our submission. The Committee's concluding observations recommended that Ireland ensures its tax policies do not contribute to abuse, marking a significant achievement and providing a foundation for civil society organizations to advocate for Irish tax policy reform.
This is the first instance of a UN human rights treaty monitoring body addressing the extraterritorial human rights impacts of Ireland's tax policies.
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