Dáil Éireann Debate, Tuesday - 18 April 2023
397. Deputy Ged Nash asked the Minister for Finance if he has carried out an analysis of the estimated additional revenue that will be generated for the Exchequer in 2024 with the introduction of his corporation tax reforms based on pillar 2 of the OECD agreement; and if he will make a statement on the matter. [17361/23]
View answerThe Department of Finance and the Revenue Commissioners are continually monitoring the potential economic impact of the implementation of the OECD agreement.
It is important to view both Pillars of the Agreement as a package when assessing the impact of the agreement due to the way in which both Pillars of the agreement interact with each other.
An initial estimate of the potential cost of implementation of both pillars of the OECD agreement in terms of reduced tax receipts was published in 2020 as being potentially in the region of €2 billion per annum- approximately 20% of CT revenue at that time.
Since 2020, while acknowledging that CT receipts have increased considerably over that time, it has not been possible to update this figure while so many aspects of the rules remain undecided and so the estimate used for budgetary purposes has remained at €2 billion.
The EU Minimum Tax Directive will implement the minimum tax element of Pillar Two in the EU, including in Ireland. Domestic legislation will be brought forward in the Finance Bill later this year. A Feedback Statement was published recently. The Directive provides for implementation by 31 December in keeping with the OECD agreement’s requirement of implementation this year.
In relation to Pillar One, significant uncertainty remains in relation to the final design of certain elements of the rules which will have a bearing on the potential impact to the Exchequer. Officials from the Department of Finance and the Revenue Commissioners continue to engage in detailed negotiations on these matters at the OECD to ensure that Ireland’s best interests are protected.
It is clear that there will be a cost to implementation of Pillar One but we believe that this is a price worth paying for the stability of the international tax framework. The Exchequer impacts of Pillar Two will depend on the outcome of detailed implementation work and resultant business behaviours as the rules are adopted globally over the coming years. Therefore, while we continue to keep the cost of the OECD agreement under review it is not possible to arrive at an estimated Exchequer impact with any certainty at this time.
