Ireland is committed to reaching an agreement to overhaul global corporate tax, but it must be one that works for small countries and accommodates healthy and fair tax competition, Finance Minister Paschal Donohoe said today.
Momentum has been building towards reaching a consensus on how to better tax multinational companies.
But Paschal Donohoe said the narrative in recent weeks has confirmed his reservations about a key plank, a global minimum corporate tax rate.
Countries must agree on the political principles underlying this concept and must have regard for countries like Ireland that follow a “substance-based industrial policy”, Mr Donohoe said, adding that these discussions have yet to take place.
The Minister reiterated his belief that the long-established Irish corporate tax rate of 12.5% is a fair rate and one that is ‘within the ambit of healthy tax competition’.
He said the rate was optimal to contributing to Exchequer revenues for investment in infrastructure while also stimulating investment and contributing to growth.
Mr Donohoe made his comments during a virtual seminar on International Taxation with the Department of Finance today.
A new dynamic in global corporate tax talks being coordinated by the Organisation for Economic Cooperation and Development (OECD) is likely to lead to a deal this year, the Paris-based body’s head of tax said today.
“There is momentum, there is a new dynamic that is likely to bring us to a resolution,” Pascal Saint Amans told today’s virtual seminar, citing in particular a recent intervention by the new US administration.
“There is a strong impetus, especially post-Covid where governments will expect their companies when they are back to profit not to locate these profits in low tax jurisdictions, while during Covid governments helped the companies through,” he added.