Irish Prime Minister: "The benefits of joining the OECD agreement on the global minimum tax outweigh the risks"
In recent months, Ireland has criticized the OECD agreement for the idea of establishing a minimum global tax on multinational corporations. In Ireland, they feared that raising the minimum corporate tax to 15% from the current 12.5% would undermine the competitiveness of the jurisdiction in the fight for investment.
These fears are not unfounded, according to the Ministry of Finance of Ireland, the country could lose up to 2 billion euros in tax revenues in the medium term, which is an impressive amount for this jurisdiction: for comparison, for the entire 2020, Ireland collected 11.8 billion euros in corporate taxes. The main reasons for the loss of taxes - Ireland will become less attractive for international corporations (many of which are headquartered in this country), in addition, part of the income will be taxed in other jurisdictions (according to Part 1 of the OECD plan).
However, according to Minister Donahue, despite the losses Irlania must adapt to the new tax rules, because only in this way it can continue to remain a profitable jurisdiction for attracting investments. “As a small open economy within the EU, we have strong ties with the US and many other G20 countries. Therefore, it is very important to comply with key international agreements, ”explained Donahue.
In addition, being within the framework of agreements and negotiations gives Ireland a voice and the ability to influence the current direction of the debate. The advantages of this already exist: Ireland played an important role in the final form of the tax agreement on the global tax, it was because of its position that the final formulation of the rate at 15% was adopted, and not “at least 15%”, as it was originally.
At the same time, despite the agreement, Ireland will remain an attractive jurisdiction for international business. According to Donahue, about 95% of companies in Ireland will be “outside the agreement”, because the OECD plan assumes that it will cover companies with global annual income of more than 750 million euros. For those companies that earn less than this quota, Ireland plans to maintain a corporate tax rate of 12.5%.