Corporate Tax

Any change within the corporate tax fee would solely have an effect on “very massive corporations” – Varadkar

Tánaiste Leo Varadkar said the corporate tax rate for the majority of Ireland-based small, medium and even large companies – with sales less than € 750 million – will stay at 12.5 percent even if Ireland signs a global agreement on one new higher corporate tax rate.

Ireland is under pressure to sign an Organization for Economic Co-operation and Development (OECD) plan for a global corporate tax rate of at least 15 percent. Ireland is one of only a handful of countries that are resisting the plans.

After a cabinet meeting on Tuesday, Mr Varadkar raised the possibility that there could be two corporate tax rates in Ireland and said the rate of 12.5 percent would be maintained for small and medium-sized businesses.

“The discussions that we are currently having internationally only relate to very large companies with annual sales of more than 750 million euros,” he said.

“So whatever agreement we or we do not sign will have no impact on the average Irish company, not even a large Irish company or medium-sized company. The rate of 12.5 percent remains for them. “

If there was a change, it would only apply to these “very large companies,” he said.

As he continued his visit to New York, Taoiseach Micheál Martin was asked about the introduction of two different corporate tax rates.

He said that “certain steps have already been taken in this regard”. [OECD]Process … originally it was 21 percent, for example. It’s at least 15 now [per cent] with which we are not satisfied ”.

Mr Martin said: “Negotiations between all countries involved are ongoing, so I do not want to go into the details until the final process is completed.

“But remember, our ultimate goal will be to maintain our competitiveness, and also the principle of tax competition, which is important, which keeps countries and people on their toes when it comes to efficiency.”

At a press conference on Monday, Mr. Martin said he would not promise US companies “one way or another” that Ireland would maintain its corporate tax rate of 12.5 percent.

He was asked by reporters on Tuesday whether Ireland was waving the white flag at the rate of 12.5 percent.

Mr Martin said he looked at the interpretations people had made of his comments and said, “The bottom line is that we are in an OECD process. And in the middle of our process, you are constructively involved. “

He added: “We have not reached an agreement. We have not yet joined the consensus. “


In Dublin, the Tánaiste said other countries wanted Ireland to join the agreement. “But that gives us a little leverage, a little bargaining power. So we want to make sure we protect Ireland’s economic interests, ”he said.

“Remember, a lot of countries will benefit from an international tax treaty, Ireland as a country will lose revenue, so we have to protect our interests, and we will.”

Defending the tax rate and Ireland’s industrial policy, he said, “It’s a perfect example of how low taxes lead to higher revenues and we don’t want to give that up, but at the same time we would prefer to be inside the tent rather than outside.”

Corporate tax was an important part of Ireland’s “pitch” for international investment, he said.

“What has worked for us is a low corporate tax rate and the peace of mind that it won’t change if the government changes, if there’s a boom or a bust or a recession.

“It’s a big part of our pitch when it comes to foreign investment and it’s been very successful and we want to keep that going. But the bottom line is that at some point we have to decide whether it is better for us to be within or without an international agreement and therefore we cannot make a firm commitment at the moment whether we will be within or outside of that treaty. “

Mr Varadkar said he “absolutely” agrees with the comments made by Taoiseach Micheál Martin, who said on Monday that he would not give US companies “one way or another” assurances that Ireland would maintain its corporate tax rate of 12.5 percent.

Finance Minister Paschal Donohoe said the proposed OECD deal contained “far too much uncertainty” to recommend that the government or the Dáil sign Ireland.

Speaking in the Dáil, Mr Donohoe said that in the OECD plan for a global corporate tax rate “the rate is currently at least 15 percent”.

The description of a possible interest rate “at least as a number does not give me the security and security that I need to be able to make a recommendation to this government”.

“Small marginal increase”

The Labor Party said Tuesday Ireland could live in Ireland for large multinational corporations with a minimum corporate tax of 15 percent.

Party’s finance spokesman Ged Nash said the party believes a “small marginal increase” in the minimum effective interest rate could be tolerated and would not prevent Ireland from attracting FDI into the state.

Mr Nash said at Leinster House that the government has made a mistake in its previous stance and must adopt the next phase of negotiations which will set a new minimum floor for global corporate tax.

“We should have enough confidence in other competitive advantages,” he said, adding that Ireland should not focus disproportionately on low corporate tax rates.

He said Ireland’s stance has lost its state allies in Europe.

“Our assessment is that we can live with a slight increase in our minimum tax rate to 15 percent,” he said.

He said the state’s tax sovereignty could allow him to differentiate between global multinationals and domestic companies that could still benefit from lower corporate tax rates.

“We can still reserve the right to set our own corporate tax rate, but that would be guided by a new minimum global floor.”

He argued that Ireland already had tremendous competitive advantages and that a change in the tax rate would not have a deterrent effect on global companies based in the state.

The party previously called for the government to fully sign the international tax reforms, saying that “the letter is on the wall” about the future of the country’s corporate tax rate.

The party’s request for the consultation of Finance Minister Paschal Donohoe on the OECD’s international tax reforms does not stop explicitly calling for an increase in the tax rate, but says Ireland should commit to the “two pillar” of the OECD process, which is an obligation to global minimum corporate tax rate of “at least” 15 percent.

“The Labor Party believes that a full commitment to the second pillar will strengthen our international reputation, provide important security to companies that want to invest here, and help put an end to the harmful global race to the bottom of corporate tax rates.” “, It says in the submission.

Tax system

Sinn Féin’s finance spokesman Pearse Doherty said there was “an obvious need to fundamentally reform the international tax system”. Sinn Féin supports the broad policy goals set out in the integrative framework of the OECD, he said.

“However, we clearly believe that any global minimum corporate tax rate under the second pillar can and should offset our domestic tax rate of 12.5 percent, and it would be a grave failure of the government if it did not achieve the negotiation process,” he said.

“They have clearly struggled to get support from other states, and much of it is down to our internationally damaged reputation, which can be attributed to successive governments actively promoting tax avoidance and aggressive tax planning with systems like the Irish and stateless dual corporations.”

In a speech on Tuesday morning, Ossian Smyth, Minister of State for the Greens in the Ministry of Public Spending and Reforms, pointed out that there was a commitment to the rate of 12.5 percent in the government program and that this was included in his party’s manifesto.

“I don’t see any immediate change. We have an agreed policy on this, ”he said.

The Greens finance spokeswoman Neasa Hourigan said global tax reform is now an urgent need to reduce income inequality and poverty and support communities around the world hardest hit by climate change.

“Ireland’s excellent track record in international aid and progressive diplomacy is now being seriously undermined by the decision in July to reject a draft OECD agreement on international corporate tax reform,” she said.

“This makes Ireland one of only nine countries that are not participating in this important development.

“Ireland should be at the center of these negotiations, protecting the interests of smaller countries. There can be no climate justice without fair taxation. “

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