Last week, Minister Donohoe spoke with U.S. Secretary of the Treasury Janet L. Yellen to discuss the work underway at the OECD to address tax challenges arising from digitalisation and globalisation. A press release issued by the Department of Finance detailed that “the ultimate ambition for us all is to arrive at an equitable agreement which gives certainty and stability in the international tax framework”. However, the Minister when speaking in the Dáil last week, discussed that “this agreement contains far too many uncertainties for me to be able to recommend to the Government and then to the Dáil that we should sign this agreement.”
When responding to questions in the Dáil last Tuesday, 21 September, the Minister detailed:
“Many of the key policy decisions of the two-pillar proposal, including the rate of the proposed minimum effective tax rate, remain undecided.
“I have been very clear on my position. I am broadly supportive of the agreement but have a very significant and serious reservation, in particular in respect to a commitment to a rate of "at least 15%" for a global minimum effective tax rate. While I remain very committed to and supportive of the process, that is the reason Ireland is not currently in the consensus. Given the economic importance of the OECD proposals to Ireland, I held a public consultation on the proposals which ran until 10 September. These submissions are now under consideration by my Department. There is a desire for Ireland to be part of the international agreement but, at this stage, there is a lack of clarity on what is in the agreement. The process must bring about certainty and there are too many significant unknowns for now.
“Ireland has long been an attractive place for foreign direct investment and has become home to many of the world's largest multinational enterprises. Aside from the headline rate of taxation, there are a significant number of advantages Ireland has to ensure it will continue to be an attractive location for foreign direct investment. As we move forward, I remain committed to engaging in the OECD process but I believe that, in any of the scenarios or horizons Ireland will confront, we will continue to be in a position where we can be competitive and continue to be in a position in which work can be created and jobs created and kept in our country.”
The Department of Finance press release details that Ireland will continue working towards achieving the goal of arriving at an equitable agreement which gives certainty and stability in the international tax framework. The call with Secretary Yellen was said to be constructive and Minister Donohoe and Secretary Yellen agreed to stay in contact.
The Institute of International & European Affairs (IIEA) hosted a webinar on Tuesday, 21 September, Fostering a Fair Recovery and Building Resilience: The Path Forward for Ireland and the EU, at which European Commissioner for Economy, Paolo Gentiloni and Minister for Public Expenditure and Reform, Michael McGrath TD, commented on Ireland’s corporate tax strategy in the context of international tax reform.
Minister McGrath noted Ireland’s concerns about the uncertainties contained within the OECD agreement. While recognising the challenges that the agreement faced for Ireland, Commissioner Gentiloni discussed how agreement between all Member States will be required to transpose an agreement into EU law.
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