Tanaiste Leo Varadkar has defended Ireland’s efforts to oppose a worldwide minimum corporate tax rate.
Treasury Secretary Paschal Donohoe Donohoe met with Treasury Secretary Janet Yellen in Brussels on Monday as international pressure increased on Ireland’s opposition to proposals for global corporate tax reform.
Ireland has become an outlier internationally by opposing proposals for a minimum global corporate tax rate of 15%.
This is about big countries trying to get a bigger share of the pie
Tanaiste Leo Varadkar
The move is supported by 130 countries around the world, including the G20 and the EU, but Ireland is aiming to keep its rate of 12.5%.
Leo Varakdar defended this stance on Monday, saying the proposals are not just about “tax justice” but about “big countries trying to get a bigger share of the pie”.
He said: “First of all, this stable low corporate tax system of 12.5% has worked for Ireland.
“We received around 10 billion euros in corporate income tax annually, twice as much as an average European country per capita.
“It’s one of those examples of how low taxes lead to higher revenues in a world where wealth, workers and businesses are very mobile.”
He added, “We should not be under any illusions about what is going on here.
“This is not just about tax equity and big corporations paying their fair share of the taxes when it comes down to it.
“This is about big countries trying to get a bigger share of the pie.
“Big countries try to get tax revenue at the expense of smaller countries like Ireland, for example Luxembourg, the Netherlands and others.”
He said larger countries should look out for their own interests and Ireland should do the same.
“The UK has secured a financial services spin-off to protect the city of London,” said Varadkar.
“America has received pledges that the European Union will not continue to tax digital companies. So we have to look after our interests and will do so. “
Mr Varadkar said Ireland would prefer to be inside the tax treaty rather than outside and that negotiations on the issue would continue.
He added: “We will not sign or endorse an agreement that does not protect our basic interests in a small country.”
The Tanaiste spoke at the launch of IDA Ireland’s 2020 annual report.
IDA has reported investments in the first half of 2021 that have brought job creation back to pre-pandemic levels, with an associated employment potential of more than 12,530 jobs.
IDA chief Martin Shanahan said the stability of Ireland’s corporate tax rate has boosted investor confidence in the country.
He said, “I think from a customer perspective they continue to have great confidence in Ireland. This is due to the stability of the tax system and tax rates over many years.
“That’s why we’re continuing to see the 2020 numbers that we saw and the numbers are now in the first half of 2021. Investors have confidence in Ireland.
“We know that a global tax framework is more likely than it is less likely at this point in time.”
Ireland has stated that it can sign many aspects of this global agreement and Mr Shanahan said Ireland has opposed a minimum global tax rate for “legitimate” reasons.
He said: “There are also many technical details to be worked out on what is currently being agreed in principle.
“It is perfectly legitimate for Ireland to articulate the Irish case in a global negotiation.
“I don’t think there’s anything remarkable about that, nor do our customers find it remarkable.”
He added: “There will be political discussions and political discussions until October.
“From the point of view of the ideas, we must of course remain stable and competitive in the context of the new framework conditions and regardless of whether an agreement has been reached or not.”