Ireland reached consensus on 12.5% ??corporate tax transfer after the G7 Global Agreement
Ireland’s second largest opposition party supports a “slight increase” in the country’s corporate tax rate, which shows that Dublin’s long-standing political consensus on multinational companies is breaking down because the G7 agreed to a plan Global tax reform.
Over the years, Ireland’s overall tax rate of 12.5% ??has been the key to its success in attracting multinational companies. But after the major group of G7 countries passed the 15% global minimum tax this weekend, Dublin is now facing major challenges.
The finance spokesman of the Irish Labour Party, Ged Nash, told the Financial Times that he called for a “national dialogue” on potential growth.
“Slightly up [in Ireland’s corporate tax rate] I believe we can bear it,” Nash said. He added that although “we are not even close to that” because the OECD has not yet reached an agreement on a global agreement, “the first thing we need to do is to start in Ireland Reached a political consensus”.
Nash said he will raise this issue with Irish Finance Minister Donohue in Parliament next week.
“The minister needs to advise Parliament on Ireland’s options,” Nash said. He added that sufficient information should be provided to the opposition to weigh the pros and cons of raising Ireland’s corporate tax rate to the lowest level in the world or defending the existing taxation that all political parties have long supported.
According to the plan under discussion, if a global agreement is reached on a tax rate higher than Ireland’s current tax, and Dublin chooses not to implement it, other countries can recover the remaining tax. Some observers warn that this is politically unpleasant in Ireland.
Ireland levies nearly 12 billion euros in corporate tax each year, and the total tax revenue is approximately 57 billion euros.in a report The Dublin Institute of Economic and Social Research issued a warning last month that higher tax rates could harm Irish small and medium-sized enterprises, which employ about two-thirds of the country’s workers.
“The 12.5% ??tax rate has almost become the creed of Irish politics,” said Gary Murphy, dean of the College of Law and Government at Dublin Metropolitan University. He said that even the largest opposition party and the far-left Sinn Fein party are cautious about raising this issue.
But on Tuesday, Sinn Fein’s financial spokesperson Pearse Doherty told the Financial Times that although he “does not advocate” raising the Irish tax rate, he has asked the Ministry of Finance to analyze in detail whether it is “favorable” for Ireland and only applies 15 for multinational companies. % Tax rate and whether this measure is feasible.
He also hopes to see a simulation of increasing the corporate tax rate “overall” and keeping it at 12.5%, he said: “We need to study this in depth. [international negotiation] open one’s eyes. “
After the G7 meeting on Saturday, Donohue told reporters that he would continue to “defend legal tax competition.”
An Irish government official told the Financial Times that although Dublin hopes to defend the 12.5% ??tax rate, if the United States pursues the world’s lowest tax rate of 15%, Ireland may be “difficult to resist” raising the tax rate.
The Irish Ministry of Finance estimates that Dublin may lose 2 billion euros per year due to corporate tax reforms, although Donohue emphasized on Saturday that potential costs have been incorporated into Ireland’s economic forecasts. The department declined to comment, referring only to the minister’s statement.
The 139 countries of the Paris OECD are continuing negotiations, with the goal of reaching an agreement later this year.