IRELAND: Next year's Finance Bill to deal with corporation tax changes.

As published on rte.ie, Monday 15 November, 2021.

The Minister for Finance has said the Government will not begin the process of transposing the details of the new global corporation tax deal into Irish law until late next year.

Paschal Donohoe said he expects that he will be dealing with the topic in next year's Finance Bill.

"A feature of our parliamentary regime is that it then gets implemented in the same calendar year," he said during a tax webinar organised by the European Movement Ireland and BDO.

"Assuming everything goes in line with our expectations from the (EU) Commission and inside EcoFin, I’d expect that we will then be dealing with the matter in next year’s Finance Bill."

Mr Donohoe said he expects that when the EU Commission comes forward with proposals around the required legislation, countries will react positively to it.

"I believe it would give a good boost to the implementation of this agreement were we able to prove that we can collectively implement this leg of it well in Europe," Mr Donohoe said.

The minister said Ireland should be in the agreement because if it wasn’t it wouldn’t be able to participate in the discussions over the coming weeks and months about the implementation rules.

"As a small and open economy it is essential that Ireland adopts and evolves in line with the changes in the international agreement," he said.

"Failure to sign up to an agreement would have resulted in continued uncertainty for businesses operating in Ireland," he stated.

He added that Ireland should be influencing and shaping international agreements, and not be on the outside of them.

"To make good on our multilateral commitments, to provide stability and certainty in the international tax framework, we must ensure the implementation respects the letter and spirit of the agreement," he said.

He reiterated the current Revenue and Department of Finance estimate for tax lost as a result of the agreement remains €2 billion annually.

He added that it would be the second quarter of next year before there is enough information available to be able to review that figure and reassess it

"This is clearly not insignificant," he said of the €2 billion number.

"However, I have no doubt that the upsides to being in an historic international agreement far outweigh the downsides of staying out."

"It is a complex, even a challenging decision, but I firmly believe it is the right one."

He said Ireland's tax model will remain stable and will remain competitive.

"While it will change our tax model for competitiveness, I believe there are many other pillars to the Irish economic model that will allow Ireland to be competitive in the future," he said.

"It is up to this and future other Irish Governments to ensure those pillars are strong."

He added that while he does believe there will be a revenue loss, we should nonetheless have cause for optimism around the future competitiveness of our economy.

Regarding the US tax reform plans and how that will impact the proposed global corporation tax deal, the minister said he is confident that we are going to see a period of significant political activity in the US that will lead to the kind of change that will in turn give all the members of the OECD the confidence to go ahead and implement the agreement next year.

"My expectation is that the United States will be at the fore in making it happen," he said.

Also speaking at the webinar, the OECD official charged with brokering the international tax agreement, Pascal Saint-Amans, said he is hopeful model domestic legislation will be finalised in the coming weeks so that the EU Commission can take it and translate it into a directive.

He said a multilateral convention would also be needed to establish the new taxing rights and nexus rules.

Mr Saint-Amans said those involved in the process have until 2022 to achieve this and it has to be signed by members at the latest in June 2022, a timeline he described as demanding.