Dáil Éireann Debate, Tuesday - 27 July 2021
376. Deputy Ged Nash asked the Minister for Finance the estimated gains that would accrue to the Exchequer over the years 2021 to 2025 from the introduction of a minimum effective corporation tax rate of 12.5% and 15% respectively; and if he will make a statement on the matter. [39942/21]
Amharc ar fhreagraThe trading profits of companies in Ireland are generally taxed at the standard corporation tax rate of 12.5%. Some of the main features of the current corporation tax regime are its transparency and that it applies to a broad base. Analysis undertaken by the Department of Finance, co-authored by an independent academic, a separate report undertaken by the Comptroller & Auditor General (C&AG), and Revenue’s annual analysis of corporation tax payments and returns, all confirm that the effective rate of corporation tax, using the most appropriate methodology, paid by corporations in Ireland is between 10% and 11%. While this percentage is lower than the 12.5% headline rate, this can be attributed to the availability of the small number of targeted tax measures that are provided for in legislation and may only be availed of where the legislative criteria for relief are satisfied. Compliance with these tax obligations and eligibility for tax reliefs are monitored by Revenue on an ongoing basis.
Notwithstanding the above, it should also be noted that seeking to impose a minimum effective tax rate would involve increased complexity and could change the attractiveness of Ireland’s corporate tax regime. It is not possible to accurately predict how the imposition of a minimum effective tax rate would affect the behaviour and investment decisions of multinational or domestic companies. Therefore, it is not possible to accurately or robustly estimate the potential Exchequer impact of these proposals.
The Deputy will also be aware that Ireland has expressed broad support for the OECD Inclusive Framework’s proposed two-pillar solution to address tax challenges arising from digitalisation and globalisation, but have expressed reservations in particular about the proposed global minimum effective tax rate of “at least 15%”. Given the importance of the OECD proposals, I have invited views through a public consultation and the consultation period will run until 10 September 2021.
