Ireland will push for a global business tax deal that “takes into account” its current low rate and enables “healthy and fair tax competition,” the country’s Finance Minister Paschal Donohoe said on Wednesday.
Remarks by Donohoe, who chairs the eurogroup of euro area finance ministers, indicates that Ireland expects clash with the United States over President Joe Biden’s ambition to introduce an overall minimum rate corporate tax.
Biden’s proposals, which emerged earlier this month, pledged to “end the race to the bottom on corporate taxation.” This has left countries with low corporate tax rates, including Ireland, bracing for a fight.
Ireland has a corporate tax rate of 12.5 percent, one of the lowest in Europe. The Biden administration wants companies to be subject to an overall minimum rate of 21 percent; the European Commission said it would favor an as yet unspecified minimum.
Addressing a virtual meeting of international officials and experts, Donohoe said it was “clear that there was new momentum” in the long-standing discussions convened by the OECD to harmonize cross-jurisdictional policies and eliminate oddities that can be arbitrated by business. .
Ireland estimates that around 20% of its annual corporate tax collection would be lost under Biden’s proposals, Donohoe said, while noting that the country has attractions for multinationals far beyond of its tax rate.
“I believe that an agreement can be found and I will work constructively towards such an agreement,” Donohoe said. “But I also believe that it is a legitimate objective that any agreement can facilitate healthy and fair tax competition, while meeting the needs of all, and not just some of the participants.”
Speaking at the same event, Pascal Saint-Amans, head of tax administration at the OECD, stressed the need for a “fiscal peace” that would end the “race to the bottom” in tax rates. global taxation.
He praised the US proposals which he said had given “momentum” to global discussions.
Saint-Amans, who is leading the OECD negotiations, said he was convinced the 139 countries concerned would reach an agreement by the next meeting of G20 finance ministers in July. The negotiations were “too important to fail,” he added.
Despite Biden’s proposals, the European Commission plans to move forward with a digital tax to help finance the continent’s economic recovery after the pandemic, according to Benjamin Angel, director of direct taxation at the European Commission.
Plans for such a levy had “nothing to do with this OECD discussion,” Angel suggested at the virtual meeting.
“It is normal that each country, or group of countries like the European Union, decides on its own fiscal mix and I see no reason why the digital economy should escape. . . of this tax combination, ”he added.