14/01/21

IRELAND: ‘Consensus-based’ approach to global corporate tax vital, says Donohoe.

As published on irishtimes.com, Thursday 14 January, 2021.

Minister for Finance Paschal Donohoe said it is vital to have a “consensus-based, globally agreed” approach to international tax.

Publishing an update to the Government’s corporation tax roadmap, Mr Donohoe said: “ Tax rules need to continue to evolve to match the modern world, and that evolution can best take place through international agreement at appropriate institutions such as the OECD.”

“ Ireland will continue to foster economic activity in Ireland, the EU and beyond by adapting and evolving our corporate tax regime while maintaining our key 12.5 per cent rate,” he said.

The report outlines key actions taken by Government in recent years to update and reform the current corporation tax regime here.

While EU states are pushing harder for tax reform to replenish their Covid-depleted public finances, Ireland favours a broader global agreement, which includes the US.

The departure from the White House later this month of President Donald Trump, who had pulled the plug on US engagement with the OECD process, makes progress on digital taxes and minimum effective rates now more likely.

This could mean a reduction in the level of profits taxable here and therefore a contraction in our corportation tax base.

Corporation tax receipts hit a record €11.8 billion last year and now account for more than €1 in every €5 collected in taxes by the Government, with a small number of large multinationals contributing a substantial part of that tax take.

The State’s reliance on so few companies, makes the tax base highly unpredictable and vulnerable to shocks.

The Government has been repeatedly warned not to use the additional receipts for day-to-day spending.

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