LAST UPDATE | 5 Oct 2021

THE LATEST DRAFT text of the international agreement to on a minimum global tax for multinationals is to drop the wording that the new rate should be “at least” 15%, it is understood. 

The government said today that no decision has yet been taken on whether Ireland will sign up to the international agreement on a minimum global tax for multinationals.

A Cabinet meeting on Thursday will examine the revised proposals from the OECD (Organisation for Economic Co-operation and Development), the organisation charged with reforming the global corporate tax regime.

Announced in early June, the draft deal would introduce a global tax of at least 15% on the profits of the largest international firms.

It was approved by the G20 in July and had so far been signed by 134 countries, but not by Ireland, whose economic model relies on its favourable 12.5% tax rate.

However, The Journal now understands that the phrase “at least” has been removed from the draft deal, possibly paving the way for Ireland to sign up to it. 

Reuters is also reporting that French Foreign Minister Bruno Le Maire said today that “Ireland’s position is evolving on this subject and a compromise can emerge at 15%.”

Asked in the Dáil today about his French counterpart’s comments, Minister for Foreign Affairs Simon Coveney said today that no decision has been taken. 

“The French Foreign Minister can say what he wants, but the Irish government hasn’t had a recommendation with the basis for making a decision yet,” Coveney said. 

Earlier today, opposition parties have each said that it would be unconscionable for Ireland not to sign up to the global agreement. 

Ireland’s 12.5% tax rate, in place since 2003, has helped Ireland attract a number of American companies, including technology giants such as Apple and Google, and pharmaceutical companies.

Speaking today, Labour’s Ged Nash TD said that the rate was “a very important tool” when Ireland’s economy was “underdeveloped” but that a change is now required. 

“We do not believe that a marginal increase in Ireland’s corporation tax rate, the minimum effective rate, will cost us jobs or impact our competitiveness or impact foreign direct investment negatively,” he told reporters today.

Ireland should be confident enough to be able to trade on the very important advantages we have. We have a very skilled and educated workforce. We are very competitive in business terms and Ireland is a productive place and a competitive place in which to do business. 

Nash says Ireland’s position should be that as a country we sign up to a 15% rate “and no more”. He adds that the government should sign up to the deal even if it does not get reassurances being sought about the future. 

“We don’t want to see a bizarre situation arise, and it will be absolutely unconscionable, where the rest of the world introduces a new minimum effective rate of corporation tax and we retain our 12.5% rate,” he says. 

Finance Minister Paschal Donohoe told the European Commission in September that Ireland could yet remain outside the global agreement to raise corporate tax levels.

At a meeting with the European Commissioner for the Economy Paolo Gentiloni in Dublin, the Finance Minister said it was “not appropriate” at present for Ireland to sign up to the OECD agreement.

He said Ireland is seeking further assurances on the predictability and certainty of the agreement, ahead of a mid-October deadline to finalise the deal.

Donohoe said Ireland, which relies heavily on the low corporate tax rate of 12.5%, would take the decision based on the best interests of its economy, and not on external pressures.

Last night, Donohoe said that he received a new text in relation to efforts to reach agreement on corporate tax reform in the coming days. “I have to brief the Irish Government on that text first. I’ll be doing that on Thursday,” he said. “In the aftermath of that the Government will then make a decision in relation to the OECD process. I’ll be able to answer questions on that text once I’ve briefed my cabinet colleagues.”

We are making some progress but there is a need for further engagement both with the OECD and the Commission. All of that is underway. The Government will form a view on this matter later in the week. At that point I’ll be in a position to confirm the Irish position on this important matter.

Speaking today about the possibility that Ireland might stay outside the OECD deal, Social Democrats co-leader Catherine Murphy TD said that Ireland “doesn’t want to be counted as part of the tax haven category.”

“The idea that we would be included in those eight countries that are not signing up and the idea that the Cayman Islands does and we don’t. I think we would we certainly open ourselves up to international ridicule and huge reputational damage,” she said. 

Murphy added that Ireland should sign up to the deal even if it does not get the reassurances the government has been seeking:

I think we’ve got to look at the consequences of not signing up to it. And the consequences are huge in terms of reputational damage. And I think that that needs to obviously be factored into the decision making when it comes.

People Before Profit TD Richard Boyd Barrett said that Ireland was “bringing shame on itself” by holding out on signing up to the plan. 

“We feel very strongly that this government should stop trying to block efforts that are taking place internationally to end the scandalous tax avoidance strategies and profit shifting strategies of staggeringly profitable multinational companies who are robbing citizens from countries across the world have billions in tax revenue,” he said. 

Meanwhile, US President Joe Biden spoke with EU Commission President Ursula von der Leyen yesterday and discussed the work of the US-EU Trade and Technology Council.

The Council is tasked with ensuring rules governing global trade and critical and emerging technologies are rooted in democratic values and market principles and address shared supply chain concerns.  

- With reporting by Rónán Duffy