05/10/21

IRELAND: Government may decide on 15% corporation tax by Thursday.

As published on irishtimes.com, Tuesday 5 October, 2021.

The Government may decide as early as Thursday whether to join the international agreement to set corporation tax at a minimum of 15 per cent, a move which would signal the end of Ireland’s 12.5 per cent rate, long a pillar of economic and tax policy.

Minister for Finance Paschal Donohoe on Monday night confirmed that he had received a new draft text of an agreement from the OECD, the international organisation that is co-ordinating the efforts to reform the way multinational companies are taxed around the world.

Ireland is one of a small number of countries which has so far refused to sign up to the agreement, and Mr Donohoe has been facing fierce pressure from the EU, the US and elsewhere to abandon Ireland’s traditional low rate of corporation tax.

But he has been seeking changes to the draft agreed this summer, which stipulates a minimum rate of “at least 15 per cent”. Ireland wants the “at least” to be excised from the draft because there are fears in Dublin that the formulation of words would leave the door open for a higher minimum rate in the future, destroying the certainty it says it needs.

Speaking in Luxembourg at a gathering of EU finance ministers, Mr Donohoe said: “We are making some progress, but there is a need for further engagement both with the OECD, with the commission. All of that is under way.

“The Government will form a view on this matter later on in the week, and at that point I’ll be in a position then to confirm the Irish position on this important matter.”

Earlier on Monday Mr Donohoe discussed the taxation talks with the European Commission’s competition and digital chief, Margrethe Vestager, and also met the economy and trade commissioners Paolo Gentiloni and Valdis Dombrovskis, as the Government seeks reassurances over how any agreement would be transposed into EU law.

The OECD hopes to clinch the deal at a plenary meeting of all 140 countries in the process.

Government sources seemed confident that Ireland’s case had been heard in the talks. Speaking on RTÉ’s Drivetime, Tánaiste Leo Varadkar said the revised text did respond to “a lot, if not all, of the concerns” of the Irish Government.

Latest exchequer returns show tax receipts running €2.5 billion ahead of target, partly thanks to another surge in corporation tax associated with several large payments from multinationals in the tech sector.