Friday 2 July 2021 9:28 am

OECD: Ireland snubs global tax deal

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

Ireland refused to sign a major agreement to overhaul the global corporation tax regime on Thursday.

130 countries and jurisdictions agreed to the deal brokered by the Organisation for Economic Cooperation and Development, which paves the way for sweeping international changes.

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

Despite not signing up to the new rules, Ireland’s finance minister Paschal Donohoe said he is “absolutely committed” to improving the global corporation tax regime and will continue to work with fellow OECD countries to reach an agreement.

“We are now going to consider the agreement in the round.. . When we reach October it will even be clearer regarding what an agreement will look like. We will negotiate and engage in good faith up to that point” he said at a briefing yesterday.

Read more: Brexit: UK and EU still no closer to financial services deal

“We will negotiate and engage in good faith” – Donohoe

Nine other countries, including Estonia, Hungary, Nigeria and Barbados, opposed the move. All G20 members backed the deal.

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

The new rules aim to push 100 of the world’s largest 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 tech titans Facebook, Amazon and Google, from hiding their earnings in offshore tax havens or low-tax countries.

OECD secretary-general Mathias Cormann said: “After years of intense work and negotiations, this historic package will ensure that large multinational companies pay their fair share of tax everywhere.

“It is in everyone’s interest that we reach a final agreement among all Inclusive Framework Members as scheduled later this year.”

Chancellor of the exchequer Rishi Sunak said: “The UK has been pushing for reforms to make the global tax system fairer for years – and at last month’s G7 in London we achieved a historic agreement that will see the largest multinational tech giants pay the right tax in the right countries.

“The fact that 130 countries across the world, including all of the G20, are now on board, marks a further step in our mission to reform global tax.”

Joe Biden, the US president, said the deal meant companies would “no longer be able to pit countries against one another in a bid to push tax rates down.”

Olaf Scholz, Germany’s finance minister, highlighted that the deal was a “colossal step forward towards more tax justice.”