Corporate tax in Ireland: EU economy chief expects tax deal to be concluded by Friday despite Irish concerns
An updated draft of a global corporate tax deal removed the words “at least” from a minimum rate proposal, removing a major hurdle for Ireland.
While Ireland initially resisted the idea of an overall minimum rate above the 12.5% that applies here, which has given way to more limited concerns that a proposed global minimum rate “At least 15%” would risk future increases.
There is an “shift” underway in attitudes towards a global deal on business taxation, the EU says, with officials confident that a deal can be reached by Friday.
“I think there is a development going on, but it’s up to these Member States to talk about it,” said European Commission chief economic officer Paolo Gentiloni, referring to Ireland, Estonia and Hungary, the three EU countries that have not yet signed. to a draft tax agreement signed in July.
His comments follow an optimistic assessment of France and positive polls from Irish ministers.
French Finance Minister Bruno Le Maire said a compromise was possible on a minimum corporate tax rate of 15 pc. Ireland opposed a July compromise that set a rate “at least” 15pc.
Green Party leader and climate minister Eamon Ryan told RTÉ on Tuesday it was important that Ireland’s reputation be in the deal.
“I am hopeful and confident that we can be part of the solution here,” he said. “I hope we can register.”
Ministers are to decide whether or not to support the deal on Thursday.
Tánaist Leo Varadkar said on Monday that a revised text received over the weekend addressed “many, if not all” of Ireland’s concerns, while Finance Minister Paschal Donohoe said progress had been made but that further commitment was needed.
A preliminary agreement was reached in July between 134 countries out of a total of 140 participating in the talks.
They agreed on a minimum rate of “at least” 15pc, to which Ireland said it could not agree because it did not provide enough “certainty”.
Finance officials from 140 countries are meeting virtually this Friday for talks led by the Organization for Economic Co-operation and Development (OECD).
This meeting will be the critical moment for an agreement, which will then be signed by the finance ministers of the world’s 20 largest economies next week in Washington, and by the leaders of the same countries at a meeting in Venice at the end of the month.
However, OECD countries are still divided over several details of the two-pillar agreement, which reallocates some multinational tax revenues between countries, as well as setting a minimum tax rate.
OECD countries have not yet decided how much of the taxable profits made by very large multinationals should be reallocated to other jurisdictions (first pillar).
First pillar exemptions for financial services and extractive industries, such as mining, oil and gas, were raised in July, but it remains to be seen whether they will stay.
Mr Le Maire said there were also divisions over a partial exemption from the minimum rate of 15pc (pillar two) for foreign assets and costs related to the payroll.
“I am, in general, convinced that an agreement is possible, on the two pillars, but of course, it is something that has to be built these days,” Gentiloni told reporters on Tuesday.
Meanwhile, the Finance Department declined to comment after Mr Le Maire said Ireland’s stance on its 12.5% corporate tax rate had changed.
Mr Donohoe’s spokesperson declined to comment on Mr Le Maire’s comments that Ireland has now changed its position.
Sinn Féin said it was “ridiculous” that the French finance minister offered more clarity on the Irish corporate tax rate than the government itself and said the government had failed in its target to maintain the rate of 12.5 pc.
“On July 14, the finance minister appeared before the finance committee and reaffirmed his goal of getting an agreement that takes into account the 12.5% rate,” said Pearse Doherty, spokesperson for Sinn Féin.
“It is now clear that the minister and the government have totally failed to achieve this goal in these negotiations. We believe this is in part due to reputational damage from successive governments that have actively facilitated tax evasion and aggressive tax planning through programs such as Double Irish and Stateless Corporations.
“We are not a party to the negotiations and we have not seen the updated text. We are now in a ridiculous situation where the French finance minister offers more clarity on the government’s current position in these negotiations than the government itself.
“It is time for the government to make a statement on the substance of the updated text and its position. What is clear is that they failed in these negotiations.
Labor finance spokesman Ged Nash praised the government’s apparent willingness to subscribe to the 15% rate, but said its resistance to date has come at a cost to its diplomatic relations with its allies.
“We have managed to cut ties with even more allies, and we are now negotiating from a weak position. Nothing has been confirmed yet and it would be wise to wait for the Irish government’s position to be confirmed. Nothing is confirmed until everything is confirmed, ”Mr. Nash said.
Speaking in Dáil, Foreign Minister Simon Coveney said: “The French finance minister can say whatever he wants, but the government has not yet had a recommendation to discuss as a basis for decision.
He was responding to Richard Boyd Barrett of People Before Profit, who called on the Coalition to do what is necessary to ensure that big companies pay a little more.
Mr Coveney replied: ‘From what I have seen and the conversations I have had with Minister Donohoe, who is doing a very good job here in terms of advocating for Ireland – while acknowledging the reality as to where this debate is moving – I hope he will be able to make a recommendation to the government on Thursday, regarding Ireland’s approach to international efforts. “
Said by Mr Boyd Barrett that the French finance minister said the decision had already been made, “just so you know”, Mr Coveney denied that was the case.