Dáil Éireann Debate, Wednesday - 5 February 2025
290. Deputy Pearse Doherty asked the Minister for Finance the estimated share of projected corporation tax that is anticipated to come from multinational corporations subject to the 15% corporate tax rate; and if he will make a statement on the matter. [3068/25]
Amharc ar fhreagraI have assumed that the Deputy is referring in his question to the OECD Pillar Two minimum tax rules, which were implemented in Ireland through the transposition of the EU Minimum Tax Directive in Finance (No. 2 Act) 2023. The Pillar Two rules apply to multinational groups and large-scale domestic groups that have annual revenue of €750 million or more in the consolidated financial statements of the ultimate parent entity of the group in at least two of the four previous fiscal years. The rules require such groups to pay a minimum effective tax rate of 15% on a jurisdictional basis, and by reference to a Pillar Two tax base based on consolidated financial accounts.
The Pillar Two rules have been implemented in Part 4A of the Taxes Consolidation Act (TCA) 1997 and apply in respect of fiscal years commencing on or after 31 December 2023. The first ‘pay and file’ date for groups within the scope of the Pillar Two rules in Ireland is 30 June 2026.
As the scope of the rules is based on consolidated accounting financial data, it is not currently possible to identify all entities which may be in scope. However, an approximation of the number of entities in scope of the rules can be made by using data from country-by-country (CbC) reporting as a multinational group with annual consolidated group revenue of €750m or more in the preceding fiscal year is required to file a CbC report. Therefore, while the scope of the CbC reporting requirements is different, it provides a useful approximation of those entities that will be in scope of Part 4A TCA 1997.
I am advised by Revenue that, based on this approximation, it is estimated that in the years 2021 to 2023, between 68% and 89% of net CT was paid by entities provisionally considered to be within scope of Pillar Two. It is important however to acknowledge that there is a notable band of uncertainty around the potential number of in-scope entities as the Pillar Two rules have distinct differences from existing reporting frameworks. It is further noted that the approximation is based on historical data and cannot take account of future changes in MNE profitability and/or behavioural responses, which may impact on the number of entities in scope. The recent change in administration in the US and its position in relation to the OECD Agreement, together with implementation decisions in other jurisdictions globally, could also have implications in respect of the ultimate economic impact of the introduction of Pillar Two.
