Gerard Rennick (Queensland, Independent) Share this | Link to this | Hansard source

I rise today to speak about a statement put to me by the Department of Treasury in the last set of estimates. I was told that the last time there was a double taxation agreement renegotiation with Ireland was in 1983. The reason I was shocked to hear that was because in 1983 Ireland had a tax rate of 40c; today, it has a tax rate of 12½c. A lot of things have happened in the last four decades, but one of the biggest things is that Ireland joined the EU and, as a result, got billions of dollars in subsidies, which enabled it to lower its company tax rate. As a result, multinational companies shifted en masse to Ireland to take advantage of this low tax rate of 12½ per cent.

I have raised a number of times in this Senate the issue of jurisdictions with a very low company tax rate. I've pointed out that, compared to Ireland, we have here in Australia a difference of 10c in our withholding tax rate, which means that many multinationals, when paying royalties to Ireland, get a 30c tax deduction, pay 10c on the way out and then pay a 12½c company tax rate. You don't need to be Einstein to work out that 10c plus 12½c is 22½c, which is 7½c lower than 30c. So, when you are shifting a billion dollars offshore to Ireland—that's what Pfizer shifted offshore in 2022—you are saving $75 million in tax just by posting a few journal entries.

But the sad thing is that it gets worse because, as the ATO told me, those multinationals actually get a withholding tax credit on the withholding tax paid to Ireland, so they are only paying 12½c. Multinationals that shift their profits to Ireland are now getting a 17½ per cent arbitrage on every dollar of profit they send off to Ireland. I suggest the ATO and Treasury get busy and start renegotiating their taxation arrangements.