Friday 16 July 2021 9:42 am

Ireland holds position against global corporate tax deal

Daily news reporter in City A.M.'s London newsroom

Ireland said it is pushing to keep its lower tax rates, denying a report that the country would abandon its 12.5 per cent rate for the proposed global rate of 15 per cent.

The country’s finance minister, Paschal Donohoe, told RTE yesterday he was “committed” to maintaining his country’s low tax rate as it has been a “key feature of our economic policy now for decades”.

Ireland, one of nine countries that snubbed a proposed global tax deal earlier this month, has benefitted from its lower rates. Large multinationals have flocked to the country, such as tech titans Apple, Google and Facebook and pharmaceutical giants Pfizer, Boston Scientific and Johnson & Johnson.

“What I’m doing is making the case for our 12.5% rate and for the right of smaller- and medium-sized economies to have a low rate, as part of their competitiveness,” Donohoe said.

However, he opened the door to a potential compromise. Not ruling out changes to Ireland’s rate, he said: “I think it’s very reasonable for me to say that if there is an agreement that I believe is in our national interest to be part of, I would recommend that to the government.

He said, as it stands, the tax deal is not clear enough and Ireland would require further details, such as “how much you can actually tax in your own jurisdiction”.

He said it “does not have the certainty or precision that is needed for this country to make an evaluation about what to do. So, whether we’re in the final agreement or not will depend on the detail”.

The global tax deal, brokered by the Organisation for Economic Cooperation and Development (OECD), was agreed by 130 countries and jurisdictions at the start of July. The agreement paved the way for sweeping international changes.

The 130 countries who agreed to the rules represent more than 90% of global GDP.

The new regime will see a global tax for 100 of the world’s largest companies and a minimum international corporate tax rate of 15 per cent. It aims to push such companies to pay more tax where they operate and earn profits, regardless of their physical presence there.

This would prevent large, multinational enterprises, such as those based in Ireland, from hiding their earnings in offshore tax havens or low-tax countries.

Details of the deal are expected to be finalised by October this year, possibly including exemptions for industries such as fishing and manufacturing.