Dáil Éireann Debate, Wednesday - 20 September 2023
174. Deputy Neasa Hourigan asked the Minister for Finance if his Department, as part of budget 2024, will present proposals to bring Ireland in line with the commitment to set a minimum effective corporate tax rate of 15%; and if he will make a statement on the matter. [40469/23]
View answerBuilding on the original OECD Base Erosion and Profit Shifting (BEPS) project, in October 2021 Ireland, along with almost 140 other countries in the OECD/G20 Inclusive Framework on BEPS, agreed a two-pillar solution to address the tax challenges arising from digitalisation and globalisation.
Recognising how large multi-national enterprises (MNEs) across the globe now operate commercially and generate value, this significant agreement will ensure that the international tax framework keeps pace with these developments in a coordinated way.
Pillar Two of the agreement will see the adoption of a global minimum effective tax rate of 15% applying to multinational companies with global revenues in excess of €750 million. Ireland will retain its 12.5% corporation tax rate on trading profits for the 95% of companies in Ireland that are outside the scope of the agreement.
Pillar Two will be implemented in Ireland largely via transposition of the EU Minimum Tax Directive (Council Directive (EU) 2022/2523), which was agreed in December 2022. The Directive aims to ensure that there is a consistent application of the Pillar Two agreement across all EU Member States and in accordance with EU law, and thus will play an important role in safeguarding Ireland's competitive tax regime.
Work is now well advanced to transpose the EU Minimum Tax Directive in Ireland in next month’s Finance Bill. This is a complex undertaking, requiring a significant commitment of resources by both the State and the business community.
Ongoing stakeholder engagement by my Department has been an important part of the transposition process. Building on an initial public consultation last year, in March this year I published a Feedback Statement on Pillar Two implementation which contained an overview of our proposed approach to domestic transposition and draft approaches to some of the key legislative provisions, and confirmed Ireland’s intention to introduce a Qualified Domestic Top-up Tax (QDTT). The Feedback Statement, together with responses received, is available on my department’s website at:
www.gov.ie/en/consultation/a0d43-pillar-two-implementation-feedback-statement/
In July, I published a second Feedback Statement containing draft approaches to further provisions of the implementing legislation, including the QDTT, and approaches to incorporating additional guidance recently released by the OECD. The Feedback Statement, together with responses received, is available at: www.gov.ie/en/consultation/45846-feedback-statement-on-the-transposition-of-the-eu-minimum-tax-directive-the-pillar-two-directive/
Responses to both consultations are informing the continuing development of the final legislation.
Certain technical aspects of how the Pillar Two is to operate remain under discussion at the OECD and Ireland is an active participant in these discussions.
