How do you say “we have to wait” in a dozen different ways? Paschal Donohoe has to wait and see whether an agreement on global corporate taxation can be reached at the OECD – and in the meantime take sitting at the fence to a new level. The republic is determined to find an agreement, he says, but is ready to stay out of an agreement if it is not in our interests. We will go around this circle a few more times in the coming weeks.
Commissioner Paolo Gentiloni played the good cop after meeting Donohoe in Dublin yesterday, saying he hoped a way would be found for the state to sign an agreement and that the European Commission understood the state’s concerns and so on .
Donohoe is right when he describes a formulation in the draft OECD agreement – that the worldwide minimum tax rate for companies will be “at least” 15 percent – as problematic. Whether this will be clarified in the coming weeks is crucial. So also indications from the USA about the way of the own tax proposals of President Joe Biden through the Congress. As Gentiloni put it, it is hard to imagine that a global deal could come about without the US, which revived the OECD tax agenda, being part of it.
Donohoe will wait and see how these two parallel paths – at the OECD and in Washington – develop before an important OECD meeting in early October, just before budget day. The real difficulty will be as the OECD moves forward, but it is unclear whether Biden can get some important action through Congress.
In an interesting post, the major US corporations represented by the American Chamber of Commerce Ireland said it would be in the best interests of the Republic to sign should a deal be struck. Meanwhile, the Advisory Committee of Accountants, which represents Ireland’s accountants, warns that if the republic loses control of its tax rate, up to 100,000 jobs could be at risk in the longer term.
There is no easy way out of this. And donohoe can’t sit on the fence forever.