23 September 2021

FT: Varadkar says Ireland wants to be ‘in the tent’ on OECD global tax deal

Ireland’s deputy prime minister has said his country does not wish to be seen as a tax haven and would prefer to be “in the tent” as negotiators in Paris seek a deal to establish a global minimum corporate tax rate of 15 per cent. Leo Varadkar has outlined a plan by Dublin in response to the planned OECD move to raise the corporate tax on multinationals from 12.5 per cent to 15 per cent.

Varadkar stressed that most Irish companies would still benefit from the lower rate. If the Irish drop their objections it would clear a significant hurdle to get to a global deal, which now has almost unanimous backing. The 140 countries involved in the deal will meet on October 8 and those close to the talks say they expect an outcome very similar to the deal agreed in July, with strong backing from Washington. “The deal will be very similar to what has been decided. It just needs to be finalised,” said one person close to the talks.

Ireland’s decision to hold out against a global minimum corporate tax rate had become difficult to sustain given that the Biden administration has begun steps to introduce the relevant legislation through Congress. The bill proposes to raise the rate of tax levied on profits made by US multinationals located in countries where domestic tax levels are low. As most of the multinationals paying low tax rates in Ireland are US companies, if Congress approves the legislation Ireland would lose its tax advantage.

Ireland wants to be part of the deal but at this stage there is a lack of clarity on what is in the deal Irish Department of Finance This appears to have concentrated minds and Varadkar proposed a new hybrid Irish corporate tax system with a 12.5 per cent charge on domestic companies and companies with annual turnover below €750m. “Any agreement that we may or may not come to, won’t impact the average Irish business. It won’t impact even large businesses or mid-caps....

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