Ireland has said it is “confident” that it could sign a revised global corporate tax agreement that would reduce the corporate rate to 12.5 percent, which has been the cornerstone of its economic policy for two decades.
It raises expectations that Ireland will now join the rest of the world to support a minimum corporate tax rate of 15 per cent worldwide, as EU partners are billing as a make-or-break at an OECD meeting in Paris on Friday. More than 1,130 countries agreed in July to a 15 percent minimum tax worldwide.
Ireland has opposed a deal to set the rate at “at least 15 per cent” for months, but Eamonn Ryan, Ireland’s environment minister, told Irish Radio on Tuesday: “I am optimistic and confident that we can be part of the solution here. “Irish Finance Minister Pascal Donoho told reporters in Luxembourg this week that he would put the revised OECD text in the cabinet on Thursday. A final decision on the Irish position was then expected.
“[The tax issue] It was sacred in Ireland, they had to take a stand on it, ”said the chief executive of a large Irish company.
Ireland is home to US technology giants such as Google, Apple and Facebook, which have bolstered the economy in the years following the financial crisis and become a major source of employment. These companies have welcomed efforts to coordinate global tax regulations.
Although the exact details of the revised OECD text are not yet known, the words “at least” are expected to be omitted, which Irish official sources have repeatedly mentioned as a major sticking point.
Tánaiste or Deputy Prime Minister Leo Varadkar said on Monday that the revised OECD text “answers many concerns, if not all concerns” promoted by Ireland.
The deputy prime minister has in the past raised the possibility of a two-tier system in Ireland, with a rate of 12.5 per cent for small domestic companies. Donoho hoped it would float with EU commissioners this week.
Ian Dria, a senior researcher at the Wilfried Martens Center for European Studies, a think-tank in Brussels, said:
French Finance Minister Bruno Le Maire told reporters in Paris that he “wanted to commend Ireland for the evolution of its position” and warned that it was “now or never” to make a global deal.
“What will happen at the OECD meeting this week will be followed by a meeting in Washington DC and Rome,” he said. “It will determine in the next 15 days or so whether we can get a definite agreement on a new international tax system for the 21st century.”
A handful of countries – especially EU members Estonia and Hungary – will still be out of the deal if an agreement is reached with Ireland. Paolo Gentiloni, the European Union’s economic commissioner, said an agreement could be reached at the G20 early next week or at the end of the month at the OECD meeting in Rome.
In addition to establishing a global corporate tax floor, the plan gives countries the right to levy taxes on large corporations based on revenue generation. “We should not underestimate this technical detail,” Le Maire said.
Friday’s OECD meeting is not yet the end of the road. All signatories need to reach an agreement beyond their legislature, but the United States – where President Joe Biden has a Senate majority – is important. Gentiloni said achieving the OECD’s goal of implementing the new rules by 2023 is “challenging but possible”.