Mr Donohoe attended last weekend’s London meeting of G7 finance ministers, who backed the global minimum tax plan, in his capacity as President of the Eurogroup. The 139 countries in the Organisation for Economic Co-operation and Development (OECD), including Ireland, will also have a say, including on details like a rate and possible exemptions, Mr Donohoe said. “It’s important to recognise that this is just a signpost in the discussions that could yet develop in the OECD,” he said at a press conference in Dublin.
But he said that as the tax talks widen to include more countries he’ll press for the right of small countries to make a case for what he called “legitimate tax competition”. The shift in global tax rules will mean a financial hit to Ireland, calculated as a loss of €2bn a year in corporate tax income by the mid-2020s, beginning with a reduction in income from next year, Mr Donohoe said.
If so, they’d pay tax here in addition to the standard 12.5pc Irish rate, he said. That has been expected and was included in Department of Finance forecasts in 2019.
However, he said moves on global tax reform are now happening quickly and a deal for significant changes is likely this year, with implications for Ireland. Depending on their size, the biggest Irish multinationals could end up among the large corporations subject to the global minimum corporate tax rate, Mr Donohoe said. “I will absolutely be making the case for legitimate tax competition and for the ability for small economies like our own to set our rate at 12.5pc,” he said. “It is too early to say agreement can be reached on a future rate, and if it is that that figure will be 15pc.”
He refused to be drawn on which individual companies could be captured by the G7 plan, but said it could apply based on the size of business the tax will hit. Ireland’s biggest multinationals include Ryanair, CRH and Kerry. With the economy growing, the expected shortfall will not have to be made up with higher income or other tax, unless spending commitments rise, he said. Whether Irish companies here are caught by the tax will depend on the final parameters of a global tax deal, he added.
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