LAST UPDATE | 4 Jun 2021

FINANCE MINISTERS FROM seven wealthy nations moved towards supporting US-backed plans for a minimum global level of corporate tax aimed at getting multinationals – especially tech giants – to pay more into government coffers hit hard by the pandemic.

The news comes as official data showed Ireland’s economy grew almost 8% in the first quarter of 2021, during a harsh lockdown when most shops closed, as multinational firms’ revenues helped it continue to buck pandemic downturn trends.

Paschal Donohoe is among the world leaders who attended the first day of the G7 summit of finance ministers in London today – as Ireland’s multinational tax practices featured on international front pages.

Ministers from the US, Japan, France, Canada, Germany and Italy will attend the two-day meeting at Lancaster House in London, with Donohoe attending as President of the Eurogroup. 

The meeting is hosted by the UK’s Chancellor of the Exchequer Rishi Sunak and comes ahead of the G7 meeting of world leaders in Cornwall next week.

UK Chancellor Rishi Sunak welcomes Paschal Donohoe. PA PA

Ahead of today’s meeting, European officials are said to be optimistic that the world’s wealthiest countries will support US-backed plans for a minimum global level of corporate tax.

A deal on a minimum corporate tax rate is “within sight”, finance ministers from France, Germany, Italy and non-G7 member Spain declared today.

A broader agreement on the measure is expected at a G20 finance meeting scheduled for July.

US President Biden has called for a unified minimum corporate tax rate of 15% in negotiations with the Organisation for Economic Co-operation and Development (OECD).

Donohoe said last week that Ireland has “significant reservations” over Biden’s plans and wants to keep its 12.5% tax rate.

Front-page news

Earlier today, the front page of today’s Guardian newspaper putting the issue of corporation tax and Ireland’s place in the debate at the centre of the issue. 

A partial front page of today's Guardian newspaper.

The report outlines that an Irish subsidiary of Microsoft made a profit of $315 billion last year but paid no corporation tax as it is “resident” for tax purposes in Bermuda. 

The report outlines that the profit generated by Microsoft Round Island One is equal to nearly three-quarters of Ireland’s GDP. 

In a statement, a Microsoft spokesperson said the figure relates to: “a one-time event and reflects an inter-company reorganization, not a cash gain.”

Ahead of today’s meeting, Sunak said that he hoped this year there would be a “global agreement on digital taxation”.

“We want companies to pay the right amount of tax in the right place, and I hope we can reach a fair deal with our partners,” he said. 

Donohoe talks about vaccines

Ireland’s Department of Finance said ahead of the meeting that the focus of the summit would the “global recovery” post-Covid, adding that the meeting would also “reflect ongoing discussions on the international tax framework”. 

On economic recovery, the G7 ministers are to consider coordinated approaches to the key economic challenges facing economies emerging from the Covid-19 crisis. 

Speaking ahead of the trip, Donohoe said: “There is now clear light at the end of the tunnel with the accelerating vaccination roll out, falling infections and pressure on intensive care services gradually coming down. 

“This year the euro area economy will rebound strongly. Our economic policies have been instrumental in facilitating this recovery and in shielding our citizens over the past year, maintaining jobs and putting our economies in a position to recover strongly.” 

At the meeting, Ministers will discuss measures to tackle climate change as well as efforts to secure an international agreement on how digital companies are taxed.

Minister Donohoe will also hold bilateral meetings with ministers from the US, Japan, Canada and the UK. 

He will meet in-person with US Treasury Secretary Janet Yellen having held a virtual meeting with her on St. Patrick’s Day.

Sunak is the chair of the finance track of the G7 under the UK Presidency of the organisation and said the summit was “hugely important”. 

“It’s an honour to be welcoming my counterparts to London with a renewed spirit of multilateral cooperation,” he said. 

Even before holding the G7 Presidency we’ve been clear on our priorities – protecting jobs, ensuring a green and global recovery and supporting the world’s most vulnerable countries.

“I’m determined we work together and unite to tackle the world’s most pressing economic challenges – and I’m hugely optimistic that we will deliver some concrete outcomes this weekend.”

Includes reporting by Hayley Halpin, Press Association and © AFP 2021