Finance Minister Paschal Donohoe said he was working with the European Commission to clarify whether Ireland could continue to charge a rate of 12.5 percent from companies with sales less than € 750 million if there was an international plan for at least 15. signs percent worldwide for companies that generate more than this amount per year.
Tánaiste Leo Varadkar stressed earlier this week that Irish companies with sales below this threshold would continue to enjoy the 12.5 percent rate if the state approves the Organization for Economic Cooperation and Development (OECD) plan presented in June.
A rate of at least 15 percent should only apply to companies with an annual turnover of more than 750 million euros.
However, under ongoing questioning by Sinn Féin TD Pearse Doherty at a hearing of the Oireachtas Budgetary Supervision Committee Thursday, Mr Donohoe admitted that the possibility of having two corporate tax rates was one of several issues he addressed with the Commission.
“It is an important question of detail that I would like to answer if we decide to join the OECD agreement,” said Donohoe.
The minister said the state faces “very serious consequences” whether it chooses to sign or reject an international agreement.
Ireland is one of only a few countries to speak out against the OECD plan, with Mr Donohoe repeatedly emphasizing that the phrase “at least” 15 percent left the possibility open that it could be higher.
However, Mr Donohoe told the committee that the government needs to consider other important issues “when we get to the point” in the coming weeks, or perhaps later in the year, in order to decide whether to sign a global tax treaty.
This includes the reputation consequences of being a rare country outside of an agreement, which is “justified” at the moment, as he is looking for certain clarifications.
“It’s also worth noting that at least entering into an agreement includes our continued ability to manage corporate tax policies within the [OECD] Forum where global decisions are made, ”he said.
Regarding the upcoming budget for 2022, Mr Donohoe reiterated that a total package of 4.7 billion euros was available. “On the expenditure side, core expenditures will increase by 4.2 billion euros, including 1 billion euros for completely new measures. The remaining 3.2 billion euros will take account of demographic pressure, public wage increases and a significant increase in capital expenditure of around 1.1 billion euros, ”he said.
Another € 500 million tax package will be provided under the 2022 budget, suggesting that income tax margins will be widened to protect takeaway income as households grapple with the specter of inflation, especially on energy bills.
To date, the government has made a total of 48 billion euros available to mitigate the worst effects of the pandemic, he noted. More than 17 billion of these supports are expected to be cut when the economy recovers.
Mr Donohoe said the public could be “increasingly confident” that the “worst of the pandemic could be behind us” unless a vaccine-resistant variant of Covid-19 emerges.