Ireland has said it is “confident” it can sign a revised global corporate tax deal that would ditch the 12.5 per cent corporate rate that has been a cornerstone of its economic policy for two decades.
This has raised expectations that Ireland will now join most of the rest of the world in backing a global minimum 15 per cent corporate tax rate, as a meeting of the OECD in Paris on Friday approaches that EU partners are billing as make-or-break. More than 130 countries agreed in July to the principle of a global 15 per cent minimum tax.
Ireland has for months resisted any deal to set a rate of “at least 15 per cent” but Eamon Ryan, Ireland’s environment minister, told Irish radio on Tuesday: “I’m hopeful and confident that we will be able to be part of the solution here.” Paschal Donohoe, Ireland’s finance minister, told reporters in Luxembourg this week that he would put the amended OECD text to the cabinet on Thursday. A final decision on the Irish position is expected then.
“[The tax issue] was sacred within Ireland, they had to take a stand on it,” said the chief executive of one major Irish company.
Ireland is home to US tech giants such as Google, Apple and Facebook, which have powered the economy in the years after the financial crisis and been a big source of jobs. These companies have welcomed attempts to harmonise tax rules globally.
While the precise details of the revised OECD text are not yet known, the words “at least” are expected to have been dropped, which Irish government sources have repeatedly pointed to as a major sticking point.
Leo Varadkar, the tánaiste or deputy prime minister, said on Monday that the amended OECD text “does respond to a lot, if not all of the concerns” Ireland had aired.
The deputy prime minister has in the past raised the prospect of a two-tier system in Ireland, with a 12.5 per cent rate for smaller domestic companies. Donohoe was expected to have floated that with EU commissioners this week.
“I think a combination of changed language and some sort of fig leaf for domestic companies would give enough cover to Dublin,” said Eoin Drea, a senior researcher at the Wilfried Martens Centre for European Studies, a think-tank in Brussels.
Bruno Le Maire, France’s finance minister, told reporters in Paris he would like to “commend Ireland for the evolution of its position” and warned that it was a “now or never” moment to strike a global deal.
“It will all come down to what happens at the OECD meeting this week, followed by meetings in Washington DC and Rome,” he said. “It’s in the next 15 days or so that we will determine if we can get a definitive agreement or not on a new international tax system for the 21st century.”
Agreement from Ireland would leave just a handful of countries — notably EU members Estonia and Hungary — still outside the deal. EU economic commissioner Paolo Gentiloni said a deal could be struck at the G20 as early as next week or at an OECD meeting in Rome at the end of the month.
As well as setting a global corporate tax floor, the plan gives countries the right to levy taxes on large firms based on where they generate revenue. “We should not underestimate these technical details” impeding political agreement among holdout countries, Le Maire said.
Friday’s OECD meeting is still not the end of the road. All signatories need to get the deal past their legislatures, but the US — where President Joe Biden has only a tiny Senate majority — is pivotal. Hitting the OECD’s target of implementing the new rules by 2023 would be “challenging but possible”, said Gentiloni.