DUBLIN: Ireland has been accused of facilitating large-scale corporate tax avoidance by European banks. A report by Oxfam and the Fair Finance Guide said a “disproportionate” amount of profits generated by these institutions were being booked through Ireland. The research found 16 of Europe’s top 20 biggest banks reported profits here in 2015. It said these banks generated €2.3 billion in profits in Ireland on €3 billion of turnover, which equates to a profitability rate of 76 per cent, four times higher than the global average. Only the Cayman Islands had a higher average profitability rate at 167 per cent. The report said Ireland appears to be “a very productive location” for European banks with just the Cayman Islands, Curacao and Luxembourg having a higher average profit per employee.
An average employee in Ireland generated €409,000 in profits in 2015, more than nine times the average for employees worldwide. It pinpointed the Spanish bank BBVA: while the bank’s employees generated on average a profit of €33,000 each, an average employee in Ireland generated €6.8 million, well over 200 times as much. The 16 top European banks operating in Ireland examined by the report paid an average effective tax rate in Ireland of no more than 6 per cent , half the statutory rate of 12.5 per cent, with three banks (Barclays, RBS and Crédit Agricole) paying no more than 2 per cent. Oxfam said countries were being denied large amounts of potential tax revenue by corporate tax avoidance. This was contributing to inequality and poverty with governments forced to decide between increasing indirect taxes such as value-added tax (VAT), which are paid disproportionately by ordinary people, or cutting public services, which hits the poorest hardest. It also said increased profits as a result of lower corporate taxation benefit wealthy companies’ shareholders, further increasing the gap between rich and poor.
