French Minister for European Affairs, Clément Beaune, in a letter published in the Irish Times and in an interview, urged Ireland to reconsider its opposition to a global minimum corporate tax rate.
“I have lived in Ireland and I love your country,” writes the Minister. He attended Trinity College Dublin from 2000-2001 on an Erasmus grant and has worked on international corporate tax reform for the past four years, initially as an advisor to President Emmanuel Macron, and most recently as cabinet minister.
On July 1, Ireland was one of only nine of 139 countries in the “inclusive framework” of the Organization for Economic Co-operation and Development (OECD) to reject a draft agreement on international corporate tax reform. The agreement is expected to be approved by the G20 summit in Venice on July 9-10. It could be finalized by the OECD in October and come into force in 2023.
“Ireland has the means to be part of this dynamic,” said Beaune. “It’s also a question of image, not to be seen as an aversion to fair taxation.”
Mr Beaune assured that the reform would not jeopardize Ireland’s prosperity. “International investors have their headquarters in Ireland because it is attractive, developed and stable,” he said. “Ireland speaks English, has a skilled workforce and young people from across Europe have moved to Dublin … a low corporate tax rate is no longer Ireland’s primary economic tool or weapon.”
In addition, levying a higher corporate tax rate would help offset any multinational company exodus from Ireland, added Beaune. The OECD estimates that a global minimum rate of 15 percent would generate around 150 billion US dollars (126 billion euros) in additional tax revenue worldwide every year.
At a March 2018 European Council, Ireland called for the OECD – not the EU – to be the forum for global corporate tax reform. “Ireland was hostile to a European agreement that would weaken our competitiveness compared to the rest of the world,” noted Beaune. “But Ireland said it was open to an international agreement. This international agreement is here now. “
US Congress approval
The Irish government is reportedly waiting to see if the US Congress approves the OECD agreement before taking a decision. “I understand the logic, but we must not give the impression that we are allying with the US … it would be an unfortunate signal for the EU if our internal agreement depended on the American position,” said Beaune.
Ireland could theoretically veto an EU corporate taxation directive. This would accelerate a move away from unanimity on tax matters, Beaune said. “I would like Ireland to reflect on what it would mean to reject what would be a major step forward for Europe.” By participating in the decision, Ireland could help “define the conditions and the rhythm under which this would take place Tax becomes effective ”.
While Mr Beaune’s letter mentions France’s relentless support for Ireland throughout the Brexit process, it insists that the issues are not interlinked. “Europe has been there and definitely will be on issues essential to Ireland,” he said. “We proved it in the financial crisis. We proved that with Brexit. Every country must be able to understand the other. “
When asked whether the continuing Irish opposition to a global minimum tax rate could jeopardize EU support for the Northern Ireland Protocol, Mr Beaune said: “We are not going to mix the issue of peace with the issue of taxes … Europe is more than an economic issue or tax advantage. “