Donohoe awaits revised corporate tax proposals

Finance Minister Paschal Donohoe said he was today expecting a revised agreement on proposals to change Ireland’s corporate tax rate.

He said he had further contacts last night with the European Union and the OECD and that the Cabinet will discuss the revised draft when they meet this afternoon.

Donohoe said at this point the government would be able to assess the text and its recommendation.

Speaking to reporters in Dublin this morning, the minister said there had been huge engagement with the commission and the OECD in recent days.

He said the government would be able to see further text regarding these issues when it meets this afternoon.

Mr. Donohoe said he was very much aware of the profound importance of small businesses in the economy.

The Taoiseach said the vast majority of small and medium-sized businesses will not be affected by the government’s decision today.

He said the consensus within the OECD is that the change will not apply to companies with a turnover of less than 750 million euros per year.

Cabinet is meeting this afternoon to decide whether Ireland should sign on to sweeping global corporate tax reforms which would require the long-standing 12.5% ​​rate to be raised to 15%.

The plan also proposes changes to where businesses would pay their taxes, which the Department of Finance says could cut Ireland’s tax levies by €2 billion a year.

The reform plans were negotiated by the OECD with 140 countries, as part of a broad program to modernize global tax rules, make them fairer and reduce reliance on aggressive tax planning by some large corporations. Multi-national companies.

The relatively low tax rate of 12.5% ​​has been a cornerstone of the successful provision of foreign direct investment in Ireland for decades and has been fiercely defended by successive governments.

Ireland was one of nine countries involved in the negotiations that did not sign the proposals last July.

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Although he agreed to parts of the plan governing where companies would have to pay their tax, he objected to the reference to an overall minimum tax rate of “at least 15%” being included in the plan, arguing that it created uncertainty because the wording would mean the rate could be further increased at a later date.

Since then, the government and officials have been involved in intense negotiations with other countries in an effort to get the project changed.

Earlier this week, an updated version of the proposals was circulated to states, with the words “at least” removed.

Removing the stumbling block paved the way for Ireland to join the deal, subject to a final Cabinet decision later in the day.

However, the government has also asked the EU to ensure that if it signs, the union will not seek to raise the minimum rate further in coming years.

This would involve transposing the text of the OECD agreement into EU law.

Negotiations continued throughout the week on this and other outstanding issues related to the plan.

These include discussions on the level at which the minimum rate would apply, as well as the nature of any exemptions or flexibilities for certain areas such as research expenditure.

350,000 people employed by multinationals

The Tánaiste told the Dáil that 350,000 jobs are linked to multinationals in Ireland, adding that this indicates that the 12.5% ​​corporate tax rate has “worked so well”.

Speaking during Leaders’ Questions, Leo Varadkar said “I think taxes should be low, simple and fair” for “businesses and workers”.

The global corporate tax negotiations have been about “big countries” trying to “get a bigger slice of the pie” and “take it away from us”, Mr Varadkar said.

“We had to protect our interests, seek guarantees,” he added.

Richard Boyd Barrett, PBP-Solidarity, called it a “scare tactic”.

Mr Boyd Barrett asked ‘how do you morally justify…being prepared to die in a ditch’ to have ‘a minimal increase’ in taxation on ‘the absolutely staggering profits of some of the biggest and wealthiest corporations of the world?”

“You fiercely oppose” any reduction in the tax burden on workers, he charged the Tánaiste, saying the government will make the situation worse with carbon taxes.

“Workers paid 20% on average – and companies paid 5%” in tax, he said.

Ireland must be part of the deal – Doherty

Sinn Féin’s finance spokesman said the party believes Ireland must be part of the OECD deal.

Pearse Doherty said it had been “very clear that we had to be part of this deal”.

He said this “still allows us to be competitive, but less competitive than where we were”, so there is a need to focus on housing, childcare, infrastructure investment and education. higher education “to enable us to be competitive in the future”.

Mr Doherty said the European Commission needed clarity that Ireland is allowed to apply a double rate, to allow a rate of 12.5% ​​to be applied to small businesses.

He said the government needed to focus on getting the committee’s approval on state aid rules.

Corporate tax is not the only attraction for FDI – Deloitte

Deloitte’s tax chief says changes to Ireland’s corporate tax rate ‘do not spell the end of foreign direct investment in Ireland’ and other factors favor Ireland in attracting and retaining investment strangers.

Lorraine Griffin told News at One that while the tax rate is important, companies report that the availability of talent and a young, educated workforce, as well as EU membership are also of crucial importance for investment here and should remain essential to ensure competitiveness.

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Ms Griffin said many companies with profits of over €750 million operating in a global economy and still requiring a presence in the EU and Ireland are attractive “as a jurisdiction with a tax rate of 15%, rather than a rate of 20% or 25%”. .

She said the proposals aim to put a floor on tax competition and end “the race to the bottom”.

She said the other pillar of the deal deals with companies operating globally and seeks to redistribute the tax cake differently.

For example, she said that in the future, companies may pay less in some countries where they previously paid large taxes, and more in other countries where they make sales or do business.

While there are many loose ends to iron out, it is certain that the direction of travel for companies with currently low effective tax rates is upwards, she added.

Additional Will Goodbody Reports

Luisa D. Fuller

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