Ireland has received an assurance that companies with a turnover of less than 750 million euro will continue to pay the 12.5% tax rate, Leo Varadkar has said.
The Tanaiste said Ireland will be able to operate two tax rates if it agrees to sign up to an Organisation for Economic Co-operation and Development (OECD) deal on a global minimum corporate tax rate.
The Cabinet is meeting on Thursday afternoon to decide if Ireland’s 12.5% corporate tax rate will be increased to 15%.
Ireland has come under increasing pressure to sign up to the OECD deal on global tax reform.
Finance Minister Paschal Donohoe has indicated a final decision will be made public after the Cabinet meets.
Before the meeting, Mr Varadkar told the Dail: “I spoke to the Minister for Finance this morning and he will be in a position to present to Cabinet this afternoon one of the things we have sought, which is the ability to continue to charge the 12.5% rate to small and medium size companies.”
Our 12.5% has been a huge success and is a really important part of our industrial policyLeo Varadkar
He said this will apply to companies with a turnover of less than 750 million euro.
“The minister informed me today that we have received that assurance, that we can do that,” the Tanaiste added.
Labour’s Ged Nash called on the Government to publish updated figures on the financial impact of implementing a 15% tax rate in Ireland.
“There is a huge information vacuum for those of us trying to responsibly interpret the Government’s position,” Mr Nash added.
“Could we gain revenue? Could we be quids in here?”
Mr Varadkar said existing estimates show Ireland could lose two billion euro a year in revenue from the change in corporate tax.
“That is only an estimate,” he said. “It’s based on certain assumptions which may or may not be correct.
“Our 12.5% has been a huge success and is a really important part of our industrial policy.
“Over a quarter of a million people work in multi-national companies in Ireland, we want to keep those jobs and the 100,000 or so indirect jobs that arise from those jobs.
“We take in about 12 billion euros a year in corporate profit tax, that is roughly double what the average European country does on a per head basis.
“Our concerns relate to the issue of being ‘at least’, and we want to make sure that whatever rate is agreed is certain and won’t ratch it up over time.
“We want to make sure that countries that sign up to this actually implement it, and we don’t want to find ourselves implementing it and our competitors do not because that would be a disadvantage to us.”
People Before Profit TD Richard Boyd Barrett said: “Corporations we know are involved in an aggressive tax avoidance and don’t even pay anything close to the 12.5% rate but pay about 5.5% in reality, and some pay a lot less.
“Why do you think it’s okay to prevent a little bit extra tax being imposed on these staggeringly profitable corporations but you do nothing and oppose efforts to reduce the tax burden on ordinary working people when we pleaded not to impose a further tax hike through carbon taxes?”
Mr Varadkar said taxes should be “low, simple and fair”.
Ireland is one of nine countries yet to sign up to the deal, and has come under increasing international pressure on the issue.