Ireland has rejected reports that it will lift its low corporate tax system to align with an international plan for a global tax of 15%.
Finance Minister Paschal Donohoe told RTÉ on Thursday that the 12.5% interest rate had been “a key element of our economic policy for decades” and that he was “obliged” to adhere to it.
Donohoe responded overnight to reports that Ireland would abandon the 12.5% overall tax rate to avoid damage to its reputation and “pariah status” around the world.
The tax rate has helped Ireland attract multinational companies, including tech companies Google and Facebook, which have their European headquarters there, and pharmaceutical companies like Pfizer.
Donohoe didn’t rule out a corporate tax change but said he was in the middle of negotiations and was pushing for Ireland to keep its low rate.
“I think it is very reasonable to say that if there is an agreement that I believe is in our national interest, I would recommend the government.
“I advocate our rate of 12.5% and the right of small and medium-sized economies to a low rate as part of their competitiveness,” he said.
Ireland is one of only nine of 139 countries that have rejected a draft agreement on international corporate tax reform at the Organization for Economic Co-operation and Development (OECD).
Proponents argue that the corporate tax rate is a sales and marketing tool for the country as the effective tax rate for multinational corporations has historically been dictated by tax avoidance programs such as the now banned “double iren”.
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“We’ve made massive changes to our corporate tax law – we’ve got rid of what we call ‘double iren’, we’ve made really significant changes, like removing the stateless company phenomenon from our tax code,” Donohoe said. Ireland has not gotten credit for making changes to national tax laws to eradicate the duplicate Irish, he added.
He indicated that he was open to change, but the OECD agreement in its current form did not provide the details Ireland needed, including “how much you can actually tax in your own country”.
He added that “it does not have the certainty or precision that this country needs to make an assessment of what to do. So whether we are in the final agreement or not depends on the details. “