Corporate Tax

Eire agrees to lift the corporate tax charge to at the least 15% in a worldwide pact to curb tax havens

Top line

Bowing to a multinational campaign to end competition for foreign companies with low tax rates, Ireland has agreed to sign an agreement to raise its minimum tax rate for multinational companies from 12.5% ​​to 15%.

Irish Finance Minister Paschal Donohoe said Ireland had decided to raise its corporate tax rate to … [+] 15% “will ensure that Ireland is part of the solution with regard to the future international tax framework.” (AP Photo / Olivier Matthys, Pool)

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Important facts

Over 130 countries have supported an Organization for Economic Co-operation and Development Framework Agreement to set a worldwide minimum rate of 15% for multinational corporations with sales of more than $ 890 million to discourage large corporations from relocating their headquarters in locations with low Misappropriating rates even though they benefit from sales in countries with higher rates.

Ireland was the last developed country to go on board – as part of a low-tax system introduced in 2003, it has attracted major US tech companies like Facebook and Apple to set up their European headquarters.

According to the American Chamber of Commerce Ireland, the Wall Street Journal reported, there are more than 800 US companies operating in Ireland and those companies have 180,000 employees.

Big number

$ 245 billion. That’s the amount governments lose in corporate taxes to tax havens each year, according to the London-based advocacy group Tax Justice Network.

Surprising fact

Guernsey, an island between the UK and France, has a corporate tax rate of 0% for most companies, followed by Barbados at 5.5% and 9% in Hungary, according to the Tax Foundation.

Key background

Irish Treasury Secretary Paschal Donohoe said, according to Bloomberg, the decision “will ensure Ireland is part of the solution for the future international tax framework”. The Biden administration has sought to introduce a global tax rate to end what Treasury Secretary Janet Yellen called a “race to the bottom” in corporate taxes. At home, President Joe Biden is trying to raise the corporate tax rate from 21% to 28%. Trump had lowered the rate from 35% to 21%.

further reading

Ireland signs global deal to curb tax avoidance (Wall Street Journal)

G20 Adopts 15% Global Minimum Corporate Tax – This Is How It Will Work (Forbes)

Corporate tax: Ireland moves towards reform deal (BBC)

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