Last week, the Institute, under the auspices of the CCAB-I, responded to the Department of Finance’s public consultation on Pillar Two Minimum Tax Rate Implementation. Pillar Two primarily consists of the Global anti-Base Erosion (GloBE) rules, which will introduce a global minimum effective tax rate of 15 per cent for in-scope businesses.
Work on this is well advanced at an international level, with a proposed EU Directive due to implement the rules in Member States in a coordinated way. As the Pillar Two framework will have significant impacts for Ireland across our fiscal, budgetary and industrial policies, the purpose of this public consultation is to seek the views of stakeholders on the transposition of Pillar Two into Irish law and to consider any challenges in that regard.
Some of the key recommendations made in our submission are as follows:
- There should be ongoing stakeholder engagement throughout the course of implementation of Pillar Two to enable stakeholders to adapt most efficiently to the new reporting regime and provide meaningful input throughout the implementation process.
- The R&D Tax Credit should be modified to ensure that the effective tax rate calculation is not prejudiced because of the domestic rules regarding the repayment of excess R&D tax credits.
- Ireland should adopt a Qualified Domestic Top-up Tax (QDTUT). Ireland should also advocate at both an OECD and EU level for a safe harbour that will deem top-up tax for a jurisdiction to be nil where it implements a QDTUT.
- The Government should ensure that the international community remains fully aware that the headline rate of corporation tax in Ireland remains 12.5 per cent for the 160,000 businesses who will continue to pay corporation tax at this rate.
- At the same time, the Government must undertake a broad review of Ireland’s tax regime for businesses and individuals in light of the reduced attractiveness of Ireland’s 12.5 per cent rate for the world’s largest companies.
- As part of this simplification process, the Government should acknowledge the work completed earlier in the year as part of the Department of Finance’s public consultation on a territorial system of taxation and set a clear pathway to establishing such a system of corporate taxation.
Our full submssion can be found at www.charteredaccountants.ie.