Gerald Nash
Question:114. Deputy Ged Nash asked the Minister for Finance the estimated revenue that would be raised from a minimum effective rate of corporation tax of 12.5%; and if he will make a statement on the matter. [11434/20]
View answerTuesday, 16 June 2020
Questions (114)
Written answers
The Deputy will be aware that companies in Ireland are mainly taxed at the standard corporation tax rate of 12.5 per cent. The higher corporation tax rate of 25 per cent applies to certain income of companies, mainly non-trading income. I am aware of different figures and methodologies being used to calculate effective tax rates paid by companies in Ireland. While some of these percentages are lower than the 12.5 per cent headline rate, this can be attributed to the availability of a small number of tax reliefs, such as the Research and Development Tax Credit, available in Ireland that may lower the effective rate of corporation tax paid.
An analysis by Revenue of corporation tax paid by companies in 2018 estimates that the effective rate of tax paid by all companies in Ireland in that year, after taking account of tax reliefs, was 10.6 per cent, and 11.3 per cent and 10.8 per cent respectively for the top 10 and top 100 companies. The overall rate of 10.6 per cent represents a marginal increase on the rate of 10.2 per cent for 2017.
I am advised by Revenue that it is not possible to estimate the amount of tax revenue that might be generated from introducing a minimum effective tax rate of 12.5 per cent without consideration of the design features underpinning the proposals. Examination currently underway by the OECD, as part of the ongoing BEPS (Base Erosion and Profit Shifting) project, of a number of potential policy approaches to international tax reform proposals, including minimum effective rates, demonstrate the complexity and challenges of designing and implementing such reform proposals. OECD analysis suggests that there can be significantly different policy outcomes depending on the design approaches taken which in turn has implications for possible revenue yield. Furthermore, yield predictions would be also impacted by the consequential behaviour of companies, particularly in relation to their decisions to locate and invest in Ireland, which would become clearer more in the medium to longer term than in the immediate timeframe.