The National Treasury Management Agency (NTMA) has indicated in its latest presentation to institutional investors that Pillar One of the OECD’s BEPS 2.0 process could reduce Ireland’s corporation tax base by up to 20 percent per annum. While the EU Tax Observatory has estimated the potential for significant increases to Irish tax revenues under Pillar Two.

The NTMA Investor Presentation October 2021 details at slide 21 that the estimated impact of Pillar One proposals is up to 20 percent of Ireland’s corporation tax base per annum. The Department of Finance’s estimate of receipts and expenditures for 2022 is forecasting a record €14 billion in corporation tax receipts for 2022. A 20 percent reduction in this figure represents a €2.8 billion hit for the Irish Exchequer, that is without considering the impact of Pillar Two.

The presentation goes on to detail that under Pillar Two the minimum global effective tax rate of 15 percent will result in a loss of some of Ireland’s comparative advantage in attracting FDI. That being said the presentation notes the positives that Ireland’s rate, at 15 percent, will remain as one of the lowest in the EU, and opportunity exists to lean on other positives, such as a young, educated workforce, English speaking, EU access and ease of doing business.

In relation to Pillar Two, the EU Tax Observatory published a note on the revenue effects of the global minimum tax rate. Based on Country-by-Country Reporting statistics, it is estimated that the increase in the Irish corporation tax rate to 15 percent would have seen Ireland’s corporate tax receipts increase by €7.7 billion in 2016 and €12.4 billion in 2017. These estimates are without considering the impact of substance-based carve-outs provided for in the international agreement. These carve-outs are estimated to decrease Ireland’s revenue potential by about seven percent in the long run, compared to a 14 percent reduction on average within the EU-27.