Ireland seeks US tax clarification before reaching global minimum rate deal – POLITICO
DUBLIN – Ireland wants a 15% minimum corporate income tax rate to be a cap, not a floor – and it doesn’t want to agree to any deal until it’s clear what the US Congress will allow, Irish officials said Monday.
Dublin clarified its results as EU Economic Commissioner Paolo Gentiloni met face to face with Irish Finance Minister Paschal Donohoe.
Ireland, which used its decades-old 12.5% tax rate to lure several hundred US multinationals to its shores, is resisting mounting pressure as one of the few resistant to the deal emerging world which is due to be formalized at the G20 summit next month.
“I am very clear that it is not appropriate that Ireland is in the deal now. This could continue to be the case,” Donohoe said at a press conference in Dublin alongside Gentiloni “But we are also working very hard to see if a deal is possible that would allow Ireland to join.”
Senior Irish officials told POLITICO that the Organization for Economic Co-operation and Development’s draft agreement, already accepted by 134 countries, is unacceptable to Ireland in part because it indicates countries would be required to charge “at least” 15% on corporate profits.
Officials said Ireland feared the European Commission would use this wiggle room to pressure Dublin to raise rates above 15%, potentially as high as the 21% rate sought by US President Joe Biden. For this reason, officials said, Dublin is unlikely to sign a deal until the US Congress – where Democrats hold a razor-thin majority – decides to back or reject Biden’s plans.
This question arises right now as Democrats struggle to craft a broad social policy package that also contemplates raising taxes for the rich and corporate.
“I have repeatedly emphasized that ‘at least’ is deeply problematic for Ireland,” Donohoe said.
In addition, he said, the wording of the OECD preliminary agreement also needs to be strengthened to give Ireland greater “certainty and predictability” in its ability to continue to compete with others. EU countries on tax policy.
Gentiloni said he came to Ireland to listen to Irish concerns, not to pressure Dublin.
“Minister Donohoe, in all of our discussions, has been a very effective advocate for the issues which are the challenges of the Irish government,” said Gentiloni. “We are not ignoring them. … I am not here to persuade anyone.
When asked if Ireland risked worsening its international reputation as a tax haven by hanging on, Donohoe said his only goal was to make the best decision for Ireland to continue to grow its economy. Ireland often tops the EU growth rankings because of its leading US business groups, including tech giants like Apple and Facebook and pharmaceutical powers like Pfizer and Johnson & Johnson.
“Any decision we make, there will be consequences,” Donohoe said. “The decision to leave the framework of the OECD will have consequences. Ireland’s decision to enter into an agreement with the OECD will also have consequences for our economy and for national tax revenues. “
Ireland raised a record € 11.8 billion in 2020 from profits from Ireland-based multinationals, which represents one-fifth of total state revenue. But Donohoe County predicts Ireland will lose around € 2 billion a year by 2025 if global tax reforms shift tax collections elsewhere. Analysts fear Ireland’s ability to attract new investment and expansion will be compromised as part of this reform.
Gentiloni stressed that the US position on any emerging global tax deal would determine whether one would be possible.
“Of course, we as the European Union need to have all Member States on board, and that is not the case at the moment,” he said. “But I can’t imagine a global deal without the central role of the United States. That would be complete nonsense.”