Dáil Éireann Debate, Tuesday - 12 July 2022
332. Deputy Michael Lowry asked the Minister for Finance if he has considered the impact of the potential loss of corporation tax receipts on the Exchequer arising from the efforts by the European Union to strike a deal among the member states on a minimum tax rate; his plans to negate the impact of this; and if he will make a statement on the matter. [38057/22]
View answerOn 8 October 2021, members of the OECD/G20 Inclusive Framework on BEPS agreed to the statement on the ‘Two-Pillar Solution to Address the Tax Challenges Arising from the Digitalisation of the Economy’. Pillar 2 introduces a global minimum corporate tax rate of 15 per cent.
My Department and the Revenue Commissioners previously estimated that the cost of this agreement could be up to €2 billion annually when both pillars come into effect. However, this is an extremely challenging exercise, both in terms of timing and magnitude. Although there are two pillars to this agreement, it is important to understand that they are intended as integral parts of a single agreed solution. How they interact and the degree to which that interaction influences business behaviour is very difficult to predict.
It should also be stressed that what we have at the moment is a broad high level agreement on the main features of a solution. The agreement is planned to come into effect from 2024, but this requires a huge amount of technical work on how it will be implemented. These discussions have been ongoing since the agreement was concluded and will continue throughout this year. As technical discussions continue, officials from my Department and from Revenue will keep the position under review.
As I have highlighted on many occasions, the level of concentration in the corporate tax base represents a very real risk to the public finances. Our medium-term strategy over the next two budgets will be to invest in our public services, phase out temporary COVID-related spending and repair the public finances. In doing so, we will restore a fiscal buffer to be able to withstand the next crisis.
