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Tax Code

Dáil Éireann Debate, Tuesday - 15 June 2021

Tuesday, 15 June 2021

Questions (78, 89, 93, 103, 108, 116, 128, 366, 367, 368, 369, 395, 398)

Bernard Durkan

Question:

78. Deputy Bernard J. Durkan asked the Minister for Finance the degree to which he expects a potential 15% universal corporation tax as agreed at the recent G7 meeting to impact on Ireland’s position as an attractive foreign direct investment location; and if he will make a statement on the matter. [31740/21]

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Marc MacSharry

Question:

89. Deputy Marc MacSharry asked the Minister for Finance his views on and response to the recent G7 agreement on corporation tax; and if he will make a statement on the matter. [31704/21]

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Mick Barry

Question:

93. Deputy Mick Barry asked the Minister for Finance if he will report on the engagements he has had with the European Commission, Eurogroup ministers and other EU governments on implementing a minimum corporate tax rate; and if he will make a statement on the matter. [31781/21]

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John Lahart

Question:

103. Deputy John Lahart asked the Minister for Finance his assessment of the economic impact of increasing corporation tax to 15%; and if he will make a statement on the matter. [31775/21]

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Réada Cronin

Question:

108. Deputy Réada Cronin asked the Minister for Finance the preparations his Department is making in conjunction with business stakeholders and representatives on the impact on businesses of possible changes in the global corporation tax environment; the meetings he has had with business stakeholders and representatives regarding same; and if he will make a statement on the matter. [30160/21]

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Gerald Nash

Question:

116. Deputy Ged Nash asked the Minister for Finance his views on the global corporation tax reform proposals as discussed at the G7 meeting he attended as President of the Eurogroup; the implications for Ireland if an agreement along the lines of that proposal are ultimately adopted; and if he will make a statement on the matter. [31606/21]

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James Lawless

Question:

128. Deputy James Lawless asked the Minister for Finance his plans with regard to corporation tax rates; and if he will make a statement on the matter. [31698/21]

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Pearse Doherty

Question:

366. Deputy Pearse Doherty asked the Minister for Finance the details of the agreement reached at the recent meeting of the G7 regarding international tax reform with regard to corporate taxation with particular reference to agreement reached regarding the reallocation of corporate profits based on location of sales and a minimum corporate tax rate; and if he will make a statement on the matter. [31540/21]

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Pearse Doherty

Question:

367. Deputy Pearse Doherty asked the Minister for Finance if he supports the agreement reached regarding corporate tax reform at the recent meeting of the G7; if not, if he supports the principle of a minimum corporate tax rate; if so, the level or rate at which the minimum corporate tax rate should be set; and if he will make a statement on the matter. [31541/21]

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Pearse Doherty

Question:

368. Deputy Pearse Doherty asked the Minister for Finance the impact on both corporation tax receipts and inward investment over a medium-term horizon of an implementation of a global minimum corporate tax rate in the form agreed at the recent meeting of the G7; and if he will make a statement on the matter. [31542/21]

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Pearse Doherty

Question:

369. Deputy Pearse Doherty asked the Minister for Finance the impact on both corporation tax receipts and inward investment over a medium-term horizon of an implementation of the reallocation of corporate tax receipts on the basis of sales location in the form agreed at the recent meeting of the G7; and if he will make a statement on the matter. [31543/21]

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Christopher O'Sullivan

Question:

395. Deputy Christopher O'Sullivan asked the Minister for Finance the estimated risks to Ireland’s economy if the global corporate tax rate is raised to 15% as proposed by the G7; and if he will make a statement on the matter. [32065/21]

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Bernard Durkan

Question:

398. Deputy Bernard J. Durkan asked the Minister for Finance if international taxation proposals are likely to impact on the economy and its future prospects; and if he will make a statement on the matter. [32080/21]

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Written answers

I propose to take Questions Nos. 78, 89, 93, 103, 108, 116, 128, 366 to 369, inclusive, 395 and 398 together.

The Government has noted the communique of 5 June from the G7 Finance Ministers which includes the desire for a global minimum effective tax rate of at least 15%. The G7 agreement is an important signpost towards an agreement but it is relevant also that there are 139 countries participating in the OECD/G20 Inclusive Framework on BEPS which is the formal decision body for any agreement. Any agreement will be a compromise and will need to be a consensus, and it must meet the needs of small and large countries, developed and developing.

Firstly, it is important to stress that the Government believes that it is in everyone’s interest to achieve a sustainable, ambitious and equitable agreement on modernising the framework for international tax to reflect increasing globalisation and digitalisation. Secondly, it is also important to highlight that reform of the international tax rules has been an ongoing process since 2013.

In this respect, Ireland has very much played its part in reframing these rules for the benefit of business and citizens, and we have proactively and diligently reformed our tax code in line with the new international norms. A lot has been achieved through the OECD’s BEPS process and we now have far more robust international tax rules and safeguards to prevent abuse, arbitrage, base erosion and profit shifting than existed a decade ago.

Since 2018, Ireland has constructively engaged in the more recent discussions to find a solution at the OECD to address the broader tax challenges of digitalisation and globalisation. This is the subject of the current negotiations which are expected to conclude this year. The OECD is proposing a two pillar solution. Pillar 1 concerns the allocation of a proportion of taxing rights to the market jurisdiction, while Pillar 2 concerns a series of rules, the Income Inclusion Rule, the Under-Taxed Payment Rule and the Subject to Tax Rule which are designed to ensure a minimum effective tax rate for large multi-national enterprises. It is important to note that the Pillar 2 proposals are broadly based on an existing US regime, GILTI, which applies to US multinationals in Ireland may already subject them to a top up tax in the US.

The minimum rate creates challenges for Ireland and other small countries for good reasons. I believe that any agreement must be able to accommodate healthy and fair tax competition. Small countries, and Ireland is one of them, need to be able to use tax policy as a legitimate lever to compensate for advantages of scale, location, resources, industrial heritage and the real, material and persistent advantage enjoyed by larger countries. At the same time, I fully accept that there needs to be clear boundaries to ensure any competition is fair and sustainable.

It is my intention to continue to make a case for the agreement to accommodate Ireland’s low but substantial 12.5% rate.

There will be a meeting of 139 members of the Inclusive framework on 30 June and 1 July in order to try reaching a consensus agreement. Further technical work will continue over the summer and in the autumn with a view to achieving a comprehensive agreement in October in lines with the principles agreed.

The Government has said for some time that change is coming and we will adapt to this change as we have done before. Ireland will remain an attractive place for inward investment.

My Department previously estimated the annual cost to the Irish Exchequer of agreement of BEPS related measures could be between €800 million and €2 billion, depending on the design of the final agreement. The starting point for the Department’s estimate was a provisional jurisdiction-specific revenue modelling-tool circulated to each country bilaterally by the OECD.

While this change could have a significant cost in reduced tax receipts, this is a price worth paying for the stability and tax certainty that will provide a robust international tax framework into the future. We have seen the seen the escalating trade tensions brought about by the introduction of unilateral digital taxes. It will benefit us all to avoid the risk of tit-for-tat sanctions negatively impacting the global trading environment. As a small open economy the imposition of sanctions could result in a disproportionate negative impact to our trading environment.

Regardless of the outcome at the OECD, Ireland will remain an attractive place for inward investment. Tax is not the only driver for multinational enterprises deciding to locate in Ireland, all of the building blocks that make Ireland an attractive place to invest will remain in place. We will maintain a competitive tax rate, with a stable business trading environment, and a young, well educated, English speaking workforce.

Questions Nos. 79 to 81, inclusive, answered with Question No. 65.
Question No. 82 answered with Question No. 55.
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