Corporate Tax

Company Earnings Tax: “Too Many Important Unknowns” to achieve a deal

The government is unlikely to make concessions on the state’s corporate tax rate of 12.5 percent until it sees the outcome of discussions at the Organization for Economic Co-operation and Development (OECD) and events in the US Congress in the coming weeks.

While Taoiseach Micheál Martin and Tánaiste Leo Varadkar have signaled that the rate could potentially change in response to international pressures to get multinational corporations to pay more taxes, sources familiar with government discussions say none Decision is made until the external factors are clearer.

A source said Ireland was “playing a bit” and that it was “still in its infancy”.

In a speech in the Dáil last night, Finance Minister Paschal Donohoe said there was “a desire” to sign a deal, but that there were “too many significant unknowns for the moment”.

He suggested that the current wording of the agreement require a minimum corporate tax rate of “at least 15 percent. . . gives no trust and no clarity ”.

Mr Donohoe said that if Ireland had signed the deal he would not be able to say for sure what the state’s tax rate would be in the future.

Desire for change

However, sentiment in the government for a possible change became clear yesterday when Mr Varadkar suggested that a new minimum corporate tax rate may only apply to large multinational corporations, and local businesses may be able to maintain the 12.5 percent rate.

“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. “

He said any change would only apply to these “very large companies”.

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

During his trip to New York this week, Taoiseach Micheál Martin said he would not promise US companies “one way or another” that Ireland would maintain its corporate tax rate of 12.5 percent.

white flag

When asked by reporters on Tuesday whether Ireland was waving the white flag at the 12.5 percent rate, Mr Martin said he had watched the interpretations people had made of his comments and said, “The bottom line is The following: We are in an OECD process. And in the middle of our process, you are constructively involved. ”

He said that was his approach and added, “We have not reached an agreement. We have not yet joined the consensus. “

However, some government sources downplayed Mr. Varadkar’s suggestion to distinguish different rates for large and small businesses. When asked, the Treasury Department would only say that negotiations are ongoing.

While the new global agreement will only affect large companies directly, a separate tariff for smaller companies would likely require European Union approval. Sources believe that while an OECD-level agreement could be an option, it would depend on the progress of the talks.

Sources said that while the vast majority of countries had signed the draft OECD deal, it remained unclear whether a deal could move forward unless the terms were approved by the US Congress.

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