Corporate Tax

The world of corporate tax is altering and Eire is within the highlight

The world of corporate taxation is changing and Ireland has to accept this. This was a key message from French Pascal Saint-Amans, Head of Taxes at the OECD, in an interview with the Irish Times.

As the man at the center of the OECD’s tax reform, no one is better qualified to see where this is going. And Saint-Amans is confident that recent signals from Washington – the Biden administration is putting forward its own plans – and the response from other capitals will pave the way for a deal.

Saint-Amans is currently administering a process that will be influenced by changes to US law that are expected to be passed this summer. He indicated that the G20 meetings in July and October would be crucial, suggesting that the final deal could go beyond the previously proposed summer period. This could potentially allow an international agreement on a global minimum tax rate equivalent to the rate set by the US on the profits of its companies abroad – the so-called GILTI rate.

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The US government has proposed a GILTI rate of 21 percent, although an agreement in Congress is expected to be in the range of 15 to 18 percent. Interestingly, Saint-Amans noted that US corporation taxation here is essentially a bilateral matter between Ireland and America.

What Ireland does with its 12.5 percent quota depends on what Congress decides, but also on what global minimum is agreed by the OECD. Is it possible that Ireland could try to reach an agreement with Washington on how all of this would work? Finance Minister Paschal Donohoe is about to dance gently as the proposals move through Congress and the OECD process comes to a head.

Ireland is in the spotlight. Most of the profits of the US companies located here were generated through Irish subsidiaries, using different tax structures based on the interplay of Irish and US law. The government will welcome Saint-Amans’ view that Ireland is not a tax haven, but it will also recognize that he will see us as key players if the talks reach a crisis.

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