As published on morningstar.co.uk, Wednesday 14 April, 2021.
(Alliance News) - Ireland's government on Wednesday forecast an annual hit of EUR2 billion in lost revenue if US-led plans to enact a global minimum rate of corporation tax reach fruition.
"The developments with Covid-19 have accelerated the progress towards new rules on global tax policy," Finance Minister Paschal Donohoe told reporters.
"In terms of the impact that will have on our revenue forecasts, we are modelling in a half a billion euro loss per year from next year onwards, with that loss reaching two billion euro per year," he said.
The EUR2 billion drain on government coffers would take effect from 2025 if a new global minimum rate of corporation tax is enforced, according to new finance ministry projections.
Earlier this month US Treasury Secretary Janet Yellen began a push to reverse what she called "a 30-year race to the bottom on corporate tax rates".
Last week she announced Washington would push the G20 for an agreement on a global minimum corporate tax to halt the erosion of government revenues, and the group is expected to unveil a proposal by July.
Ireland relies heavily on receipts from its 12.5% corporation tax rate to fund government spending, and hosts an outsized number of technology and pharmaceutical firms.