Corporate Tax

Paschal Donohoe “assured nobody will undercut us” after Eire launched 15% corporate tax

THE Treasury Secretary said he would “carefully examine” the legislation that a new global tax treaty will bring when it is released next month.

Paschal Donohoe said the implementation of the corporate tax rate change through an EU directive will prevent other member states from “undercutting” Ireland.

Last month Ireland agreed to join the OECD framework for a global tax rate of 15% and to abandon its esteemed previous tax rate of 12.5%.

The OECD deal will ensure that large companies pay a minimum rate of 15%.

Donohoe told the Oireachtas Finance Committee the decision to join the change was a “significant moment”.

He said the benefits of the EU directive will result in its being applied consistently in all member states.

“I am confident that no one will undercut us and it is being faithfully implemented by the directive which has the advantage of addressing this issue,” added Donohoe.

“We’ll look into it carefully and expect to be released in December.”

Donohoe said the new rate will allow Ireland to remain competitive and an “attractive” place to invest.

The government had previously estimated that corporate tax revenues will be two billion euros lower due to the international tax treaty.

The agreement will introduce two different pillars to be implemented.

Pillar one will see a redistribution of a share of the profit in the consumer’s jurisdiction.

In the second pillar, a new global effective minimum tax rate will be introduced for multinational companies with a worldwide turnover of more than 750 million euros.

Donohoe said he anticipates around 100 global companies will be subject to the new tax treaty.

The Minister was urged by Sinn Fein TD Pearse Doherty for an updated estimate of the projected tax loss.

Donohoe said his department will not be able to come up with a revised figure until the OECD provides more details.

#Open journalism

No news is bad news
Support the journal

Your contributions will help us keep delivering the stories that matter to you

Support us now

He added: “I have long signaled that there will be a cost to Ireland to sign this agreement.

“My department and the tax office have estimated that the cost of lost tax revenue could amount to up to two billion euros in the medium term. These costs will be reviewed during the critical technical discussions.

“However, it is important to consider the very real risks involved in being out of the process.

“As a small, open economy within the EU, we have strong connections to the USA and many other G20 countries.

“That is why it is important that we adhere to the most important international agreements.

“In addition, if Ireland were not in the agreement, we would lose control of the critical and ongoing technical discussions.”

Related Articles