The Deputy will be aware that the current proposals flow from earlier discussions at both OECD and EU level to address taxation issues arising from the growing digitalisation of the economy. The OECD published a work plan on 31 May setting out the broad direction of travel for the period ahead. This work plan was endorsed by G20 Finance Ministers on 9 June and work will continue over the next 18 months with a view to reaching final agreement by end 2020.
It is important to note that the work plan remains on a "without prejudice" basis and that a lot of work remains to be done before we have a sustainable agreement.
I have been very clear that further change to the international tax framework is necessary to ensure that we reach a stable global consensus for how and where companies should be taxed. A certain, stable, and globally agreed international tax framework is vital to facilitate cross border trade and investment.
When I look at the proposals currently being discussed at OECD I believe that proposals examining the issue of where companies generate their value and whether new concepts of value creation need to be recognised, might provide a basis upon which a sustainable agreement could be found at the OECD.
However, proposals to introduce a minimum effective tax rate remains problematic, not least because of a lack of clarity as to what it is the proposal is trying to achieve.
Ireland is supportive of measures to limit companies’ capacity to engage in aggressive tax planning. Artificial profit-shifting for tax purposes poses a real challenge and must continue to be addressed. However, I do not support measures which have as their core objective the end of legitimate and fair tax competition.
The benefits of tax competition have long been recognised by the OECD and others, as long as this competition is fair.
I believe that fair tax competition is a legitimate tool for small peripheral countries to balance against size, geographical location or resource advantages other countries enjoy, and this is supported by a wealth of economic research.
Ireland is positively engaged in the discussions at OECD and remains open to solutions which respect our right to compete fairly and which respect the legitimacy of Ireland’s longstanding 12.5% corporate tax rate.