The Organisation for Economic Cooperation and Development is expected to announce a revised Framework Agreement in Paris today on global corporate tax reform.
The deal will see big multinationals pay an effective minimum global rate of 15%.
Later today, Ireland will join 140 other countries in the global deal after Cabinet yesterday approved an increase in Irish corporation tax from 12.5% to 15% for companies with a turnover in excess of €750m.
The reforms have been brokered by the OECD among 140 countries, as part of a widespread agenda to modernise global tax rules, to make them fairer and reduce the use of aggressive tax planning by some large multinational companies.
The deal is made up of two parts.
The first allows for a proportion of profits from sales made by multinationals to be taxed in countries where those sales are made.
The second part relates to a global minimum effective corporation tax rate of 15% to apply to the profits of companies with annual sales of over €750m.
In Ireland, it will apply to 56 Irish and 1,500 foreign multinationals employing half a million people.
Other companies will still pay their corporation tax at the existing 12.5% rate.
The new system will operate from 2023, which Finance Minister Paschal Donohoe described as “a very ambitious deadline”.
Speaking at a press conference yesterday, Mr Donohoe said the agreement involves “far-reaching reforms to the global taxation framework”.
He said he sought changes to the deal to secure “certainty and stability”.
“I believe we have now reached that point”, he said. “This is the right decision. It is a sensible and pragmatic decision”, and will be “critical to create” certainty.
The Government has received assurances on both this point and the retention of Research & Development tax credits “at the highest level” in the European Commission.
The Department of Finance is guiding that the impact on corporate tax receipts will be in the order of €800m to €2bn a year.
Opposition parties have supported the decision to sign up to the OECD tax deal.
Sinn Féin said it accepted the merits of the process and Ireland could not be an outlier or labelled a tax haven.
Party leader Mary Lou McDonald said there must be an absolute assurance that the 12.5% rate will still apply to SMEs that are the backbone of the Irish economy.
She also said the Government must be sure that Ireland can still retain a level of control to set and decide rates.
The Labour Party said the move would not have a negative impact on existing jobs or the pipeline of investment.
Finance spokesperson Ged Nash said Ireland should have confidence to trade on its highly skilled workforce and mature sophisticated economy.
He also called on the Government to publish detailed financial projections of the cost of the move.
People Before Profit said the change was long overdue.
TD Richard Boyd Barrett said that it was right that “staggeringly profitable corporations that have been involved in very aggressive tax avoidance strategies should pay a little more in tax”.