Ireland will be able to maintain its corporate tax rate of 12.5 percentage points and attract US investment regardless of a global tax treaty, a senior US lawmaker said.
Yes, I think so, because Ireland is a market-driven economy, ”said Congressman Richard Neal, chairman of the House Ways and Means Committee, the Chief Tax-Writing Committee of the House of Representatives.
“The relationship between Ireland and the US will certainly not be affected as we have a discussion on tax policy, that’s for sure.
“I think it is not worrying, these discussions will continue.”
He spoke at a virtual event organized by the Institute for International and European Affairs just a day after the US proposed a global minimum tax rate of 15 percent, lower than an earlier 21 percent plan.
“I agree with the president’s initiative for a global minimum tax,” said Neal.
“The administration has already moved some numbers and I think we want to make sure the final number is the one we can stick to.”
However, Mr Neal said he wants to “harmonize international tax rates” and end “contract shopping” by multinational corporations, and that a potential EU-US trade deal “will invite a harmonized tax system”.
The EU and the US are not currently negotiating a trade agreement.
On Thursday, the US Treasury Department proposed a global minimum tax rate of “at least 15 percentage points” in order to reach an agreement by the summer in talks led by the Organization for Cooperation and Development (OECD).
In a statement, the US Treasury Department underlined that 15 percent is a lower limit and that discussions should continue to be ambitious and increase that rate.
EU tax chief Paolo Gentiloni said yesterday that he had a “positive” assessment of the US plan and that it was “quite possible” to reach an agreement by the summer.
Finance Minister Paschal Donohoe said Ireland would do its part to reach an agreement.
“I had reservations about a high effective minimum tax rate as it could be a step towards global tax harmonization rather than aggressive tax planning,” Donohoe said yesterday in a speech at the Global Conference of the American Chamber of Commerce in Ireland.
“I firmly believe that an agreement can be reached and I will work constructively towards such an agreement.”
The minister recently used a series of speeches to advocate small countries’ right to tax competition and said Ireland would remain “attractive to international investment”.
In 2020, multinational corporations contributed corporate tax revenues of EUR 11.8 billion.
The Treasury Department estimates it could lose EUR 2 billion a year in revenue as a result of the OECD plan.
The European Commission has promised to make an OECD agreement binding for EU countries in 2023. This emerges from a corporate tax roadmap released earlier this week.
Neither the OECD agreement nor legal proposals by the EU would force Ireland to increase its corporate tax rate of 12.5 percentage points.