Ireland ‘committed’ to maintaining its low corporate tax regime
Ireland has denied reports that it will scrap its low corporate tax regime to align with an international plan for a global tax of 15%.
The finance minister, Paschal Donohoe, told RTÉ on Thursday that the country’s 12.5% rate “has been a key feature of our economic policy now for decades” and he was “committed” to maintaining that.
Donohoe was responding to reports overnight that Ireland was set to relinquish the 12.5% headline tax rate to avoid reputational damage and “pariah status” around the world.
The tax rate has helped Ireland attract multinationals including tech companies Google and Facebook, which have their European headquarters there, and pharmaceutical firms such as Pfizer.
Donohoe did not rule out changing the corporation tax but said he was in the middle of a negotiation and was pushing for Ireland to retain its low rate.
“I think it’s very reasonable for me to say that if there is an agreement that I believe is in our national interest to be part of, I would recommend that to the government.
“What I’m doing is making the case for our 12.5% rate and for the right of smaller- and medium-sized economies to have a low rate, as part of their competitiveness,” he said.
Ireland is one of only nine of 139 countries to reject a draft agreement on international corporate tax reform at the Organisation for Economic Co-operation and Development (OECD).
Supporters argue the corporate tax rate is a sales and marketing device for the country, as the effective tax rate in the past for multinationals had been dictated by tax avoidance schemes such as the “double Irish”, which is now outlawed.
“We’ve made huge changes in our corporate tax code – we phased out the so-called ‘double Irish’, we’ve brought in really significant changes like, for example, eliminating the phenomenon of stateless companies from our tax code.” Donohoe said. Ireland did not get the credit for making changes to domestic tax laws to stamp out the double Irish, he added.
He indicated he was open to a change but the OECD agreement as it stood did not have the detail Ireland needed, including “how much you can actually tax in your own jurisdiction”.
He added it “does not have the certainty or precision that is needed for this country to make an evaluation about what to do. So, whether we’re in the final agreement or not will depend on the detail”.