Ireland 'is not being bullied' over minimum corporate tax rate - Donohoe


Jack Quann
Jack Quann

12.12 20 Jul 2021


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The Finance Minister Paschal Donohoe says Ireland can decide to remain outside an OECD plan for a global minimum rate of corporation tax.

A deal on tax, endorsed by 130 countries, would set a global minimum rate of 15% and redistribute profits made by multinationals to where they are made, rather than where the company is headquartered.

The move has been seen to put pressure on Ireland to increase its rate above the current 12.5%.

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Ireland stands to lose some €2bn every year in taxes from 2025 under the plans.

Finance Minister Paschal Donohoe told Pat Kenny he does not believe Ireland is being bullied into accepting a higher rate.

"Even though we are not in the agreement at the moment... I could not describe what is going on at moment as bullying, either.

"It is a very large and very complex negotiation, and at the end of the day we have a choice regarding whether we want to be in it or not.

"Even though I do not believe we can be in the agreement at the moment, I do believe we need to stick at the negotiation.

"The position that we are taking and why is well known; are we able to make the case for it and advance it? Yes we are, in meetings that we have with different governments and with the OECD".

'Irish competitiveness'

He says an appetite for our views to be heard "is mixed to tell the truth".

But he says there is more to this than simply a corporate tax change.

"What is also contained in the draft statement at the moment is a very considerable change in where taxes are levied and how they are paid.

"What many are advocating at the moment is that that project continues in parallel with a change in the rate."

And he says, under these plans, Ireland's losses could reach €2bn.

"The change in - what's referred to as taxing rights - means that we could lose up to €2bn in annual corporate tax revenue per year, probably in three to four years' time.

"And in relation to what a higher rate could mean, one of the things we would need to consider is does a higher rate reduce our competitiveness versus other economies - and in turn, would that affect the retention and creation of jobs within our country?"

Minister Donohoe says Ireland could still "technically" have a different corporate tax rate.

"It is up to us, and up to any country, regarding whether they want to be in this framework or not.

"It is up to us, at the end of the day, to decide do we want to exit any future agreement.

"That would bring additional consequences that would merit consideration before that choice is taken."

But he adds that agreement on how and where taxes are collected would need to get the green light from all OECD members.

"In order for agreement to be reached and then implemented, everybody has to be part of that agreement.

"In relation to the rate issue, it would technically be still possible for a country to decide to run a different rate to what the minimum effective tax rate would be across the world."

He says the vast majority of Irish firms would not be affected by this plan, but others based in Ireland would.

"The companies that are most likely to be affected by this agreement are the very global, international companies that are located here in Ireland, but have their origins from outside of Ireland".

Ireland 'is not being bullied' over minimum corporate tax rate - Donohoe

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Main image: Finance Minister Paschal Donohoe in the Government Press Centre at the publication of the Government's Summer Economic Statement 2021. Picture by: Leah Farrell / RollingNews.ie

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Corporation Tax Ireland Minimum Corporate Tax Rate Multinationals OECD Paschal Donohoe Tax

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