Businesses and others with a view on the OECD corporate tax plan have been asked whether they see specific implications for Ireland from implementing the proposals and what they see as the benefits and challenges.
The request comes in a public consultation from the Department of Finance on the OECD plan, which sets a deadline of September 10th for submissions, in time for what looks likely to be a frantic period of negotiation ahead of an October deadline to agree the final terms of a deal.
The consultation document, launched on Tuesday, says the outcome of the process “has the potential to significantly impact Ireland’s fiscal, budgetary and industrial policy.”
It says that Ireland is “not yet in a position to join the agreement and, specifically, a global minimum tax rate of ‘at least 15 per cent’”.
However it says that the Minister for Finance “remains committed to the process and aims to find an outcome that Ireland can support.”
The consultation asks interested parties whether they have any views on both parts of the OECD deal, involving a change in where companies pay tax, and the new minimum rate.
Ireland has raised reservations about the part of the plan which refers to a minimum corporate tax rate of " at least 15 per cent." The Minister for Finance, Paschal Donohoe, has refused to rule out increasing the rate as part of Ireland signing up to the new global deal. However speaking at the launch of the consultation, the Minister said: "I just want to reiterate my complete commitment to standing over the 12.5 per cent rate."
He added that evidence of this is how Ireland has not signed up to the OECD deal at this stage “because I don’t believe the agreement that is there delivers the clarity that Ireland needs...
“Looking to the future I think it’s important to look at what I’ve done now.
“That shows the commitment that I have to protecting this rate.
“And in the future very broadly, I continue to believe that our 12.5 per cent rate will be a really important part of our tax policy”
Negotiations
Ireland is one of eight countries among 139 involved in negotiations who have not signed an outline deal agreed as part of the OECD talks.
In relation to the global minimum tax, the consultation asks for views on how the tax is calculated and for specific rules which would ensure that if a country maintains a tax rate below the minimum, then the excess can be collected by the home country of that multinationals.
So, for example, if Ireland kept a lower rate, then the US Treasury could charge American companies the balance. The consultation also asks for views on proposals that companies from countries who do not adopt the minimum could face additional taxes where investing overseas, before profits return to the home country.
The consultation also asks for views on the parallel US tax reform process, seen as vital for Ireland given the high level of US investment here.
The Biden administration has proposed a minimum tax rate of 21 per cent on the international earnings of its companies, though it is unclear what the US Congress will sign up to.
Earlier the Minister for Finance, said that signing up to the proposed OECD tax deal at this stage would raise important questions about the long-standing stability of the Irish tax code.
Lack of clarity in the outline terms of the deal agreed by 131 countries included not only the level of a proposed minimum global corporate tax but also other issues, the Minister said on RTÉ radio's Claire Byrne show, saying Ireland was likely to have to make a call on whether to sign up to a deal later this year or in 2022.
Rate
However a lot of detail, including the level of the minimum rate, remain to be agreed. Hungary and Estonia are the only other two EU states not to sign up, raising questions about the ability to mandate the deal for EU countries, given the traditional need for unanimity on tax matters.
However there is speculation that some countries who have signed up still have difficulties with aspects of the proposed deal.
“The details really matter,” Mr Donohoe said, saying that given the vital interests involved for Ireland he had decided not to make a decision on whether to sign up until these were clearer. Doing so now, before the detail was clear “would raise really important questions about the stability of the tax code.”
The Minister has consistently refused to speculate on whether Ireland would sign up if a global minimum rate of 15 per cent is agreed, saying that he cannot do so in the middle of a negotiating process.
Deal
Mr Donohoe told Claire Byrne that while it was too soon to say whether the “ jig was up” for the 12.5 per cent tax rate, “ the global tax world is changing” and Ireland would have to adjust.
Parts of the proposed deal which involve changing where companies pay tax could cost the Irish exchequer more than €2 billion a year, Mr Donohoe said. Raising the 12.5 per cent rate could raise some revenue to compensate, though how much would depend in part on the reaction of big multinationals to the terms of any new OECD deal .
