Dáil Éireann Debate, Thursday - 5 October 2023
217. Deputy Bernard J. Durkan asked the Minister for Finance the degree to which the OECD taxation provisions in respect of inward investment are currently in place and operational; and if he will make a statement on the matter. [43443/23]
View answerAs the deputy will be aware, the Government, in October 2021, took the decision to join with almost 140 other jurisdictions in a two-pillared agreement to create a new international tax framework and we intend to follow through on that commitment.
Pillar One seeks to reallocate taxing rights to market jurisdictions through Amount A as well as simplifying transfer pricing rules in certain cases through Amount B.
Pillar Two introduces a minimum effective tax rate of 15% for in scope MNEs, with global revenues over €750m, through the GloBE rules and also provides for the introduction of a treaty based rule, the Subject to Tax Rule, in certain instances where a rate below 9% applies.
The OECD Inclusive Framework published an Outcome Statement in July, outlining the significant progress made towards implementation of the agreement.
The GloBE rules will be implemented in Ireland largely via an EU Directive, the transposition of which will be delivered through domestic legislation published as part of this Autumn's Finance Bill. A Qualified Domestic Minimum Top-up tax will be legislated for as part of the transposition allowing Ireland to collect any additional top-up tax arising from the Pillar Two.
It is not envisaged that Ireland will be exposed to the Subject to Tax Rule element of Pillar Two, the technical negotiation of which has now been finalised.
An Outcome Statement was published by the Inclusive Framework of the OECD on 12 July 2023 setting out the progress made to address the other remaining elements of the Two-Pillar Solution. Amount A of Pillar One will be implemented largely via a Multilateral Convention (MLC). While there are still some open issues, negotiation of the MLC's text is at an advanced stage. The MLC will only come into force when it has been signed and ratified by a critical mass of jurisdictions.
Finalisation of the work on Amount B of Pillar One which should reduce the number of costly disputes, is also progressing.
There are a small number of open issues in relation to both elements of Pillar One and Ireland remain actively engaged in the negotiations to resolve these open issues.
I look forward to completing the implementation of this significant agreement. Our long-standing position is that the international tax system needs to keep pace with changes in how business is now being conducted globally and global implementation of the agreement will bring much needed stability to the international tax framework after the turbulence and uncertainty of recent years.
