17/06/21

IRELAND: Donohoe defends 12.5pc tax rate as global talks heat up.

As published on independent.ie, Thursday 17 June, 2021.

The Minister for Finance has defended Ireland’s 12.5pc tax rate and the strategy of “legitimate tax competition” as talks on a global corporate tax rate heat up.

After a meeting of euro area finance ministers on Thursday, Paschal Donohoe said he hoped for a global deal this summer in talks led by the Organisation for Economic Cooperation and Development (OECD).

“What I’m doing, as many other countries are doing, is making their case for their national interest, which in our case is an agreement that can accommodate our rate, and recognising that small and medium-sized economies, we don't have the advantages of scale or location that others have. And taxation can be part of a competitive offering,” Paschal Donohoe told reporters in Luxembourg on Thursday.

"I really hope and believe we’ll get agreement as we move through this year.”

He was forced to deny reports that he had met with the Italian and French finance ministers about tax on Thursday, after France’s Bruno Le Maire said he had scheduled a chat with Mr Donohoe.

“I did not meet the Italian and French ministers today, and I wasn’t asked to meet them, and I’m very happy to meet them at any point,” Mr Donohoe said. "I believe in respectful and clear communication, as they do.”

At their first in-person gathering this year, the 19 ministers discussed a preliminary deal between the world's seven leading economies (G7) earlier this month based on a briefing by Mr Donohoe, who was at the G7 meeting.

The G7 deal still needs to be approved by G20 nations in July before being put to the 139 countries currently discussing global corporate tax rules in the OECD.

The OECD is working on a new way of calculating multinationals’ taxable profits and sharing them out by country as well as a 15pc global minimum tax.

There are still questions over which companies to include in the rules, but French finance minister Bruno Le Maire said the important thing was to cover tech giants such as Amazon.

All of the EU’s major economies, including France, Germany, Italy and Spain, are in favour of the deal.

Even Luxembourg, which is usually reticent on taxation matters, supports it, with finance minister Pierre Gramegna saying on Thursday that a minimum tax would “bring peace to fiscal relations between countries”.

The Netherlands has also indicated it will support a deal if it is backed by the world’s biggest nations, but smaller EU countries - including Ireland, Hungary, Malta and Cyprus - are less keen.

“France is focused on this question of international taxation despite the scepticism about it,” said French finance minister Bruno Le Maire.

At Thursday’s meeting, eurozone ministers failed to agree on how to complete the bloc’s banking overhaul due to disagreements with Germany over an EU-wide deposit insurance scheme to protect savers and the public purse from a future financial crash.

Mr Donohoe said the discussions that took place were “intense” but that he hoped to get something down on paper in the coming months.