Dáil Éireann Debate, Tuesday - 29 June 2021
149. Deputy Peadar Tóibín asked the Minister for Finance if Ireland plans to join the global rate of corporate tax being proposed by the US administration; and the level of engagement by the administration with the proposal and negotiations to date. [34394/21]
View answerFirstly, 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 and may already subject these multi-national enterprises to a top up tax in the US.
The US is proposing a minimum effective tax rate of 'at least 15%' which is supported by the G7. This 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 1 July in order to try reaching a consensus agreement on key principles. 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.
